Page last updated at 19:58 GMT, Saturday, 20 December 2008

Canada to aid car manufacturers

Prodution line at a General Motors factory in Ontatio, Canada
Canada makes up 20% of the north American automotive trade

Canada has announced a C$4bn ($3.3bn:2.2bn) bail-out plan to aid two US car manufacturers with operations there.

The offer of emergency loans follows the US government's decision on Friday to provide $17.4bn in loans to help General Motors and Chrysler survive.

Prime Minister Stephen Harper said it was "a regrettable but necessary step to protect the Canadian economy".

The amount promised represented the 20% share Canada has in the North American automobile industry, he said.

The money will help the two companies continue to operate while they restructure their businesses.

The federal government will provide C$2.7bn in short term loans, with a further C$1.3bn coming from Ontario, where the manufacturers are based.

"These are extraordinary circumstances that require extraordinary measures," said Ontario premier Dalton McGuinty.


Mr Harper said there were "hundreds of thousands if not millions" of families in Canada potentially affected by the ongoing difficulties in the car industry.

He said the deal ensured that Canada was looking out for their interests and insisted that the deal was "not a blank cheque".

The government also announced a restructuring programme for the industry similar to that introduced in the US.

"We have an intention of seeing a restructured industry and we'll do what is necessary to make sure that all stakeholders play ball with that agenda," said Mr Harper.

The North American car industry employs millions of people and businesses had said the bail-outs were desperately needed.

On announcing the US bail-out, President George Bush said that allowing the US car industry to fail would not be "a responsible course of action".

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