Volkswagen drops threat to sack 10,000 workers

The largest car manufacturer in Brazil, Volkswagen has dropped a threat to dismiss ten thousand workers from its main plant in Sao Paulo.

Under an agreement with the main union, up to three-thousand workers will apply for voluntary redundancy.

Correspondents say the climbdown by Volkswagen has been linked to an expected cut in interest rates by the Central Bank later todaywhich may increase car sales.

Volkswagen had said the dismissals were necessary to cut costs after sharp falls in sales which followed the announcement of austerity measures by the government last month.

From the newsroom of the BBC World Service