Chancellor Gordon Brown has stepped into the negotiations between MG Rover and Shanghai Automotive Industry Corporation.

During two days of talks in Shanghai this week Brown offered multi-million pound tax breaks to the Chinese in the hope of bringing about a rapid conclusion to the deal that would see China’s biggest car firm pay £1 billion for a 70% stake in the Longbridge company. It would see massive investment at the plant with MG Rover sharing its technological expertise with SAIC in return.

Negotiations had stalled after Chinese government officials voiced their doubts about the sense of such an investment.

But Brown said he hoped the deal would soon be “brought to a conclusion soon to the benefit of the British motor industry”. It is expected the deal will be completed in the spring.

Details of the offer Brown had made to the Chinese were not disclosed but it is thought to involve Rover being able to defer VAT payments - thought to be about £50 million - for a year.