By: Mike Campbell
The American (government!) owned car manufacturing giant, General Motors, has announced that it is pulling out of a move to sell off its European subsidiaries Opel (based in Germany) and Vauxhall (based in the UK). The reason given for this apparent change of heart is better than expected performance over recent months. Indeed, figures for September showed the first rise in US sales for two years. GM has also acknowledged that Opel is important to its global plans. It had been faced with little alternative to unloading the European end of its business in the light of a $30.9bn group wide loss in 2008, due to the global recession. A deal had been set up to sell the business to Canadian car parts manufacturer Magna which had secured support from the German government as a mechanism to support jobs in the German car manufacturing sector.
Whilst the mood in the car manufacturing sector may be upbeat, pessimism seems to have returned to the financial sector in Europe. Some analysts are questioning whether the celebrations marking the end of the recession may have been premature. The doubts depressed all of the European markets which fell by about 1%.
Shares in the UK’s RBS fell by 6.4% which had a knock-on effect in the rest of the banking sector. At one point, the FTSE dipped below the 5000 point barrier, but rallied to close at 5049.3. The European Commission have estimated that losses in the financial centre for 2009 could reach 400bn Euro ($591bn). Shares in India were down by 2.3% yesterday, following comments from the Reserve Bank of India that the time was right to withdraw some of the support measures that were introduced to increase the amount of money in the financial system. India’s economy managed to grow during the global recession.