No EU funds involved in Peugeot’s UK closure

EU funding was not a factor in the decision by French firm Peugeot to relocate car production from the UK to Slovakia.

The European commission has clarified some media reports suggesting that EU cash, aimed at boosting economic growth in poor areas, was involved.

“I can confirm this was not the case. Peugeot did not request and did not receive funds,” said a commission spokeswoman on Friday.

The move follows claims in the UK Sun newspaper that the Slovak government has used “EU handouts” as a sweetener for the French car firm.

Peugeot is closing its Ryton factory in the UK city of Coventry with the loss of 2300 jobs in an area already hit hard by restructuring in manufacturing industry.

The car production – and jobs – are going to Slovakia and a new production site 50km outside the country’s capital of Bratislava.

Fears that EU funding, a big investment in new central and eastern Europe, poorer than the west, has been a factor in industrial relocation are not confined to the Peugeot case.

Recent production shifts by Electrolux and Hewlett Packard have raised concerns that bosses can pocket EU regional cash that is supposed to benefit Europe’s poorest areas in order to shift production to low wage countries.

The commission has found “no evidence” of the involvement of EU funding in decisions to switch manufacturing from high to wage areas.

And, a six-year-old safeguard rule requiring companies to pay back EU cash if factories are relocated within five years of a Brussels grant has never been triggered.

“This rule has existed since 2000 and since then we have not found any trace of a company having received aid and moved,” said the spokeswoman.

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