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Mandelson fights threat of Vauxhall cuts

The spectre of job losses hangs over Vauxhall's Luton and Ellesmere Port plants this morning after a European Union official reportedly said Canadian auto parts maker Magna's takeover of will involve "painful" cuts - and governments should stop using taxpayers' money to prevent them.

Magna is believed to be preparing to cut around 11,000 jobs in Europe, according to a business plan leaked to the Frankfurter Allgemeine Zeitung on Tuesday.

It plans to close the Opel Antwerp plant in Belgium and cut jobs in Britain and Spain but keep all four factories in Germany running.

"We should stop creating the impression that jobs can be saved with European taxpayers' money," said Guenter Verheugen, the EU's industry commissioner and vice-president of the EU executive.

"It is not the case. The loss of jobs is just pushed elsewhere," he said in an interview with ZDF television in Germany.

The Opel takeover and restructuring of the European automobile industry "is not going to happen without job losses and very painful cuts".

The EU competition authorities are looking into the takeover to see if it contravenes European antitrust regulations.

Business secretary Lord Mandelson has written to Neelie Kroes, the European competition commissioner, asking for an examination of the viability of Magna's plans for Vauxhall.

He is looking for pledges from Magna to minimise British job cuts in return for government loans.

Lord Mandelson was thought to have been ready to offer up to £400 million of government loans to Magna in return for commitments on Vauxhall jobs, subject to European approval.

About 5,500 workers are employed at the two Vauxhall factories. Magna is said to be preparing to cut up to 1,200 UK jobs.

"General Motors, which agreed in September to sell a majority stake in Opel to Magna, hopes to sign off on the deal in October, chief executive Fritz Henderson said last week.

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