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Europe
France: Aid does not break EU rules
Paris defends loans to car industry as Peugeot-Citroen says it will cut 11,000 jobs.
Last Modified: 11 Feb 2009 15:49 GMT
Sarkozy recently suggested French car makers move production home from the Czech Republic [AFP]

French ministers have said they want to protect their homegrown industries during the global economic downturn and have denied that a rescue package for their struggling car makers breaks European Union state aid rules.

France has received much criticism from EU allies over a $7.8bn state loan offered to Renault and PSA Peugeot-Citroen earlier this week in return for an unwritten pledge not to close sites in France.

Bruno Le Maire, France's European affairs minister, said: "It is not protectionism. It is defending our industry and defending our jobs. I think it is the least one can expect from the government when faced by this crisis."

Francois Fillon, the country's prime minister, will go to Brussels on Thursday to defend the aid package and Le Maire said he would visit a number of EU countries next week to do likewise.

Czech anger

Le Maire's visit will include the Czech Republic, France's most vocal critic, after Nicolas Sarkozy, the French president, suggested recently that French car makers should move production home from plants in the Czech Republic.

The European Commission has expressed legal concerns over the French state aid plan and said it wanted more details before deciding whether to grant approval.

Some European officials have accused France of undermining the EU's single market to stave off labour instability at home, but Le Maire said such criticisms were "exaggerated".

"All European countries faced by this crisis are introducing the same type of measures to prevent the job situation getting dramatic and to make sure their industries do not weaken too badly," he said.

Peugeot Citroen has said that it will shed more than 11,000 jobs this year [AFP]
Underscoring the problems facing the car sector, Peugeot-Citroen, Europe's second-biggest car maker by volume, posted on Wednesday a $444m net loss for 2008 and said it expected to remain in the red until 2010.

The company said it will shed more than 11,000 jobs this year, starting with plants in Europe outside France.

The row has dented EU efforts to define a co-ordinated response to the economic crisis which is expected to tilt the 27-nation bloc into recession this year.

France has been less severely hit by the downturn than many of its neighbours, but Sarkozy has come under severe pressure from trade unions to do more to protect jobs and salaries. 

More than one million protesters took to the streets in France in January to demand more action and a further strike is scheduled for next month unless he makes concessions.

British protests

Meanwhile, hundreds of workers have protested outside British power stations on Wednesday in the latest action over the use of foreign contractors in the recession-hit country.

About 400 workers demonstrated outside the Staythorpe power station in central England, owned by German group RWE.

A smaller protest, involving around 100 workers, took place at a plant at the Isle of Grain in southern England, owned by German utility E.ON.

Trades unions are demanding "British jobs for British workers" and are angry at the use of foreign labour by sub-contractors appointed by France's Alstom, the main contractor at both power stations.

Hundreds of Spanish workers have been hired at Staythorpe, while Polish workers have been brought in at the Isle of Grain.

"We've got a situation on the site at Staythorpe where there's potential work available and the UK lads aren't being given proper consideration for that work so there's anger about that," said Steve Syson, regional officer for the Unite union.

Wednesday's protests followed a week-long dispute at the Total-owned Lindsey oil refinery in eastern England this month, which was settled when Total, a French energy company, agreed to hire more local employees.

Source:
Agencies
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