21 Mar 2009

Renault row rocks EU summit

9:52 am on 21 March 2009

A new row over French protectionism has broken out, as EU leaders hold a summit in Brussels on the economic crisis.

It followed the news that Renault was moving some vehicle production from Slovenia to create 400 jobs in France.

The European Commission said it would seek urgent clarification. It comes only weeks after the EU agreed France could give state aid to its carmakers.

The BBC reports the row may overshadow an EU pledge to double to 50bn euros an emergency fund for non-eurozone members in trouble.

In addition, EU leaders said they would provide up to 75 billion euros ($US102 billion) in loans in an effort to boost the International Monetary Fund's capital to $US500 billion.

The two-day meeting took place as the world's biggest economies prepare for a summit of G20 countries in London on 2 April.

The argument erupted after French industry minister Luc Chatel told French radio that Renault would relocate part of its production from Slovenia to a plant at Flins, near Paris, creating 400 jobs there.

Renault said it intended to increase production both in Slovenia and France and the shift was intended to meet a shortfall in capacity at its Slovenian plant.

It denied the move was linked to a pledge to keep jobs in France in exchange for state aid.

Renault last month reported a steep fall in profits and abandoned its targets for 2009, blaming an economic crisis "of massive proportions". Sales in Europe were down more than 7%.