European Commission proposes €5 billion aid package for auto industry

The European Commission has reportedly given its stamp of approval to a large aid package to help the struggling European economy, with at least €5 billion earmarked for the automotive industry.

In total, the proposed package will encompass €200 billion for a number of sectors of the economy, and will be meted out to all 27 nations in the union, although the exact figures of this distribution are uncertain. The figure of €5 billion is significantly less than the €40 billion that European carmakers requested early last month, but more aid for the auto industry is not being ruled out.

Like other regions of the world, the aid package is designed to improve the environmental quality of cars coming out of Europe, with the incumbent president of the European Commission stating that the package will work to help the car industry "transform into a more modern industry", become "more friendly to the environment" and adapt "it to the new trends in overall demand."

The European Investment Bank has been asked to put up around 80% of the loan, reports Automotive News. This funding will be significantly different from the $25 billion package approved in the U.S., which the head of the European Commission indirectly called "an old-fashioned industrial plan".

The governments of France and Germany seemed concerned that the package would be too small, leaving European automakers at a disadvantage compared to the U.S. auto industry. The president of France, Nicolas Sarkozy, hinted that further aid may be in the pipeline, iterating that Europe "will not let down" its auto industry.

European leaders are still deciding on the plan, with approval expected to be forthcoming in December during an EU summit.