German crisis threatens UK jobs

THOUSANDS of British jobs are under threat because Germany is poised to scupper plans to build a £15bn European transport aircraft.

Germany has been blighted by recession and is unable to raise enough cash to fund the project because of rules governing borrowing by countries in the euro-zone. Britain and seven European partners promised last month that they would fund the military cargo plane, which is to be built by Airbus.

Some 10,000 staff are employed by the consortium in Britain at wing-making centres in Filton, near Bristol, and Broughton, Clwyd. Thousands more suppliers depend on the firm for their livelihoods and up to 40,000 jobs would be created by the project in Europe, including at least 3,000 across Britain.

Roger Lyons, general secretary of Britain's second biggest union, Amicus, said: 'Any reduction in orders to Airbus in this country is going to be bad news. We will be seeking urgent meetings with the company.' Investment in development and production cannot begin until Germany gives the goahead to buy 73 of the A400M planes at a cost of nearly £6bn.

German chancellor Gerhard Schroeder guaranteed that cash last year. Now he cannot conjure up money for job programmes at home, let alone for a military project that his Green government partners are opposed to anyway.

Chancellor Schroeder cannot borrow more money because of euro rules forbidding countries going beyond a 3% budget deficit - something Germany is already perilously close to. The country is more than £2.5bn short and has little chance of finding the extra money.

Airbus beat Boeing in a lengthy bidding battle to secure the contract for the new A400M, which is deemed essential to deliver on European Union promises to create a rapid reaction force. It is designed to replace the UK's Hercules fleet and the transporters of other EU nations. Britain was due to buy 25 of the aircraft.

Economist Helmut Schwilk said: 'The Deutschmark would have allowed much more breathing space. The euro has severely limited the chancellor's room for manoeuvre, creating a highly embarrassing and potentially very damaging scenario.'

British defence officials expect Germany to find the money but are set to review the entire plan if it fails. The Defence Ministry is impatient to take delivery of the plane.

If Germany cannot secure finance it would turn to the bigger C-17 Globemaster built by Boeing instead. Berlin was supposed to put the final touches to the order for signing on January 31. But Oswald Metzger, a leading Green MP, said: 'There is no way this can be completed in this legislature period.'

Fierce debates are expected in the German parliament this week as intense behind-thescenes pressure is exerted on Germany by foreign ministers and EU bureaucrats. Rudolf Scharping, Germany's defence minister, has come under heavy criticism over the shortfall in money. The German armed forces are in a parlous state with armour, communications equipment and weaponry all heavily criticised by the Americans.