Mario Monti: 'Matter of Months' Euro- Delay Threat to Rover's Revival; LONGBRIDGE CASH AID COULD BE PUT ON ICE FOR 18 MONTHS

Article excerpt

Byline: RAY MASSEY

ROVER'S revival hopes were dealt a new blow yesterday when the European Commission launched an inquiry which it admitted could scupper a [pounds sterling]1.5billion lifeline for Longbridge.

The decision to investigate most of a [pounds sterling]152million British government grant leaves a question mark over thousands of UK jobs, and threatens to put back the arrival of a vital new model in showrooms.

Competition commissioner Mario Monti, announcing the widely-expected inquiry yesterday, said it would be concluded 'as rapidly as possible' but admitted: 'It's a matter of months, not weeks.' Under EU rules, it could take up to 18 months.

At stake is the Government aid which earlier this year secured a plan by Rover's German owners BMW to invest [pounds sterling]1.5billion in a revamped assembly line at the Birmingham plant. It will be used to build a new medium-sized Rover saloon to replace the existing 25 and 45 models - safeguarding 9,000 Longbridge jobs as well as another 40,000 jobs at suppliers across the country.

That cannot now go ahead until the EU has approved the State aid, potentially delaying the arrival of the new model planned to start rolling off the production line in 2002. Speaking on BBC Radio 4's Today programme,Mr Monti said he understood the risk that BMW might decide to pull the plug on its investment in Longbridge, but added: 'I would not over-dramatise that.

This is a long-term investment decision by a company based on rather important structural factors, among which is State aid.' However, with Rover losses this year expected to be between [pounds sterling]700million and [pounds sterling]1bil-lion, angry unions and politicians last night urged the Commission to reach a speedy verdict. …