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Prime Minister Gordon Brown will pledge today to make Britain’s tax system attractive to large multinational companies in an effort to secure the backing of business leaders before this year’s election.

Brown’s government will propose a set of principles that include promises to ensure new taxes aren’t too complex and a commitment to hold consultations before introducing new corporate taxes. The plan will be published by Chancellor of the Exchequer Alistair Darling at a conference in London.

“By maintaining a world-class environment for business to do business we can attract the investment that will underpin our move from recession to recovery to growth,” Brown said in his weekly podcast yesterday.

Brown’s Labour Party and David Cameron’s Conservatives are competing to win credibility with business leaders before the election, which Labour Party documents suggest will be held on May 6. So far, the campaign has centered on which party has the best recipe for tackling Britain’s record peacetime budget deficit.

Darling began talks with company leaders in April 2008, establishing a panel of more than 10 executives from international companies who meet regularly with Treasury ministers and civil servants.

Brown, Darling and Business Secretary Peter Mandelson will be joined at the London conference by executives from companies including Bombardier Inc., China Merchants Bank Co. Ltd., Burberry Plc and Lockheed Martin Inc.

Bank Stakes

The Conservatives pledged yesterday to sell U.K. government stakes in Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc to voters as their support continued to slip in opinion polls.

The plan to sell shares at a discounted price, outlined by Conservative Treasury spokesman George Osborne, came as opinion polls show the party’s lead slipping after it called for spending cuts to start this year to reduce the deficit and the economy exited recession in the fourth quarter of 2009.

A poll by YouGov Plc in the Sunday Times newspaper showed the Conservative lead over Labour at its narrowest since December 2008.

YouGov said the Conservatives had the backing of 39 percent of those surveyed, down one percentage point from a month ago, while Labour were backed by 33 percent, up two points. Details of when the poll was taken and the margin of error weren’t given.

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Davenport, Iowa — Lee Enterprises, the publisher of the St. Louis Post-Dispatch and other newspapers, painted an improved financial picture over a year ago for its shareholders Wednesday, citing better revenue trends and deeper-than-expected cost reductions.

Mary Junck, Lee chairman and chief executive, told shareholders at the company’s annual meeting that Lee newspapers and digital products are reaching nearly 7 of 10 adults weekly in its markets. Its newspapers also are reaching 6 of 10 younger readers, or those 18 to 29 years old.

"The effectiveness of our products, coupled with our intensive sales culture, continues to keep Lee ahead of the industry in advertising revenue performance," she said, adding that Lee has outperformed the industry every quarter throughout the recession.

Lee reported Wednesday that total revenue fell 9.2 percent in January from a year ago, the first time since 2008 that revenue didn’t show a double-digit decline. For the quarter ended Dec. 27, Lee’s revenue dropped 13.8 percent.

Carl Schmidt, Lee chief financial officer, reminded shareholders that a year ago, Lee predicted it would reduce its 2009 cash costs by $100 million. In reality, the company cut $147 million in cash costs, a decrease of 17.9 percent.

Among the cuts was retiree health care at the Post-Dispatch, Lee’s largest newspaper. The decision, announced in December, as well as ongoing union negotiations, prompted more than a dozen Post-Dispatch retirees to attend the annual meeting at Lee’s headquarters.

Several retirees quizzed Lee executives about the decision, expressing their dismay at the action.

Junck said Lee, as well as many newspaper companies, "had to make a lot of tough choices" in 2009.

Shannon Duffy, the business representative for the St. Louis Newspaper Guild, said the change affected 80 retirees, but the union fears the same change could be passed on to another 150 retirees represented by the contract now being renegotiated.

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Only 20 percent of Oregonians have earthquake insurance, even though Oregon is among the states at highest risk for a major earthquake, according to a survey by the state Department of Consumer and Business Services.

Standard home owner policies do not cover earthquakes, but optional earthquake coverage is readily available and relatively inexpensive, the department said.

“Consumers may want to think about their ability to rebuild if their house is destroyed in an earthquake,” said Cory Streisinger, director of the Department of Consumer and Business Services. “Insurance should be weighed as part of other earthquake preparations.”

Jan. 25 will mark the 310th anniversary of the last major Cascadia Subduction Zone earthquake, magnitude 9.0, centered 75 miles offshore. That temblor damaged the coastline from Northern California to Southern British Columbia, according to the Oregon Department of Geology and Mineral Industries.

A 10,000-year geologic record shows these mega-quakes occur every 300 to 600 years, putting Oregon within the window of a major earthquake, said James Roddey, state earth sciences information officer.

Damaging earthquakes have also occurred within the past 16 years in different parts of the state, causing tens of millions of dollars worth of damage.

The Department of Consumer and Business Services Insurance Division last year surveyed 20 insurance companies that account for 80 percent of the home owner insurance premiums in the state.

It found:

• Home owners generally can buy earthquake insurance as an addition to their policy or as a separate policy. The few companies that do not offer earthquake insurance in Oregon typically refer clients to a company that sells stand-alone earthquake policies.
• Earthquake coverage is relatively inexpensive — often less than $300 a year for a $300,000 wood-frame home. Masonry homes are more expensive to insure.
• Owners of older houses may need to bolt their homes to the foundation or make other seismic upgrades before they can buy earthquake insurance.

Earthquake coverage generally features high deductibles. These typically amount to 10 percent or 15 percent of the amount covered by insurance. A home owner with a house insured for $300,000 and a 10 percent deductible would pay $30,000 before the policy would pay. Coverage for contents is separate.

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Internet security and naming services provider VeriSign Inc sees near-term pricing pressure in its online security certificates business, but expects to grow margins in 2010 by controlling costs, its top executive said.

The company has been hit by a slowdown in its SSL business — which enables secure e-commerce and communication on the Internet — where the annualized average unit revenue for VeriSign, GeoTrust and Thawte-branded certificates for the third quarter was $234, down 3 percent from the prior quarter.

“We will continue to see some ASP pressure for a while,” CEO Mark McLaughlin said in an interview with Reuters. “With the economy improving, that would start to abate.”

The authentication services business, which includes SSL, forms about 39 percent of VeriSign’s revenue. Naming services — VeriSign serves as the global registry for .com, .net, .tv, .cc, .name and .jobs domain names — makes up most of the rest.

The company was offering discounts for long-term customers to preserve the relationships, he said.

“We haven’t cut our prices, but we’re willing to have discussions around giving discounts,” McLaughlin said online cash advances. VeriSign’s rivals in the SSL business include GoDaddy.

“This is sort of a mixed blessing where the low end of the market is growing faster than the high end of the market,” McLaughlin said.

McLaughlin sees an improvement in margins in 2010.

“Into next year, we’ll continue with this tight expense control. We think that we should be able to continue to get some incremental improvement into next year.”

VeriSign has said it expects fourth-quarter operating margins to be in line with that of the third quarter, when it recorded operating margins, excluding items, of 38.6 percent.

The company, which has been implementing a restructuring strategy to sell its slower growing businesses, expects to sell its last remaining unit to be divested by the end of the year, McLaughlin said.

On November 5, VeriSign swung to a third-quarter profit, but its fourth-quarter revenue forecast fell short of Wall Street estimates.

(Editing by Anil D’Silva)

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The U.K. economy probably grew for the first time in more than a year in the third quarter as a pickup in manufacturing and service industries ended the worst recession since World War II, a survey showed.

Gross domestic product probably rose 0.2 percent in the three months through September after contracting 0.6 percent in the previous quarter, according to the median of 33 forecasts in a Bloomberg News survey. The Office for National Statistics releases figures at 9:30 a.m. in London.

U.K. officials are showing little willingness to rein back stimulus measures even as the economy starts to rebound. Chancellor of the Exchequer Alistair Darling said this week he will focus on cementing the recovery in time for a general election due by June. Bank of England Governor Mervyn King said Oct. 20 there should be no illusion that a return to growth will be smooth. Policy makers will decide in two weeks whether more bond purchases will be necessary to boost growth.

“A figure of 0.1 or 0.2 isn’t a big deal, because even that won’t be enough to start shrinking the spare capacity in the economy,” said Colin Ellis, an economist at Daiwa Securities SMBC in London and a former central bank official. “That’s what matters in the medium term for inflation. They should do more QE in November.”

The GDP data is the first for the third quarter from a Group of Seven nation. Central banks in Canada and Italy both forecast slumps in their economies ended in the same period, and the U.S. probably also returned to growth then, according to the median forecast of economists in a Bloomberg News survey.

France, Germany and Japan exited their recessions in the second quarter.

‘Well Below’

The economy’s output is still “well below” the levels of a year earlier and there should be no illusion of a “smooth and painless” return to sustainable growth, King said on Oct. 20. Officials said at their Oct. 8 meeting that improvements in conditions for banks are of limited significance and there is still a danger of further losses.

“More than six months out, there’s no question we’re going to have to reverse the extreme policy measures we took,” Posen said in an interview with BBC Radio Scotland broadcast today. “The question is what point is the economy ready to sustain, on a private-sector basis, the recovery. There’s legitimate discussion and differences as to how close we are to that.”

Recovery

Credit losses and writedowns worldwide now total $1.6 trillion. Lloyds Banking Group Plc and the government are weeks away from an agreement on whether the lender can escape a program to insure up to 260 billion pounds of potentially toxic assets, a person familiar with the matter said yesterday.

Prime Minister Gordon Brown is looking to the recovery for respite as his ruling Labour party struggles to erode the poll lead held by David Cameron’s Conservatives. The opposition party had a 17 percentage-point gap over Labour in an ICM Research poll for the Guardian newspaper published on Oct. 21.

The economy will contract 4.4 percent this year and then expand 1.3 percent in 2010, according to forecasts released this week by the National Institute of Economic Research.

Unemployment may keep rising even after the end of the recession as a lagged effect of the slump. St. Ives Plc, the U.K. printer of the Economist and Vogue magazines, has shed about 12 percent of workforce, Finance Director Matt Armitage said on Oct. 19.

Niesr says that the Bank of England should pause its bond- purchase program at the Nov. 5 decision, when officials will have revised forecasts on the economy. The British Chambers of Commerce has called for a further expansion of the plan to reach 200 billion pounds to secure the recovery.

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Congress is considering proposals to greatly expand a soon-to-expire $8,000 tax credit for first-time homebuyers — potentially applying it to all but the wealthiest homebuyers.

Supporters say doing so would further boost home sales, stabilize housing prices and generate jobs. Opponents say extending and expanding the credit would be a waste of money and only temporarily stave off further price declines.

The credit now can be claimed by anyone buying a home who has not owned one for three years and who closes the deal by Nov. 30.

Beyond extending that deadline, some lawmakers want to make the credit available to all homebuyers who meet income eligibility requirements. And some want to increase the amount of the credit from $8,000 to $15,000.

Currently the first-time home buyer credit is available in full to those buying their primary residence who make $75,000 or less ($150,000 for joint filers). A partial credit is available to those making between $75,000 and $95,000 ($150,000 to $170,000 for joint filers).

The case for expanding the credit

Through mid-September, 1.4 million tax returns had qualified for the credit, according to the IRS.

Some portion of those returns, which the IRS couldn’t specify, represents buyers who took advantage of an earlier version of the tax credit, which was only worth $7,500 and has to be repaid over time.

By the end of November, the credit will have been used by 1.8 million homebuyers, at least 355,000 of whom would not have bought a house without the tax break, according to estimates by the National Association of Realtors.

Mark Zandi, chief economist of MoodysEconomy.com, favors extending the current credit until June 1, 2010, and making it available to all home buyers regardless of income or at least to everyone except those at the highest end of the income scale. He estimates the cost of doing so wouldn’t exceed $30 billion over 10 years.

Zandi’s reasoning: Foreclosures are expected to rise next year because of rising unemployment, and that will drag home prices down further. Extending and expanding the credit will help mute that decline. And by June, there’s a chance the job market will have stabilized.

"The most fundamental argument for the credit is that nothing works in the economy if housing is falling — it hurts household wealth and credit becomes tight," Zandi said. "[The credit] is a good insurance policy. It’s vital to stem the housing price declines."

To kick start economic activity, Zandi believes lawmakers should set aside an amount of money for an extended credit and tell potential home buyers "first come first served."

The National Association of Home Builders would like the credit extended for all of 2010.

"We estimate that this would increase home purchases by 383,000 in the next year and help mitigate the foreclosure crisis by whittling down inventory," NAHB Chairman Joe Robson said in a statement. "This stimulus alone would create nearly 350,000 jobs over the coming year, which is exactly what the economy needs right now."

A study funded by the industry-supported Fix Housing First Coalition found that the current credit helped stimulate demand for homes at the lower end of the price spectrum.

"An expansion of the tax credit would spur an increase similar to what occurred in the lower end of the market, by motivating buyers in the ‘trade-up market’ to purchase a higher priced primary home," said Kenneth Rosen in testimony before Congress. Rosen runs the consulting group that conducted the study and is chairman of the Fisher Center for Real Estate and Urban Economics at the University of California in Berkeley.

The case for letting the credit expire

Opponents of extending and expanding the credit worry that such moves offer poor bang for the buck and won’t stem housing declines.

"Everything spent on this program will ultimately have to be paid for later through higher, economically harmful taxes," Ted Gayer, co-director of economic studies at the Brookings Institution, wrote in a Brookings blog.

Assuming there are 5.5 million home sales in 2010, Gayer said, expanding the credit to all homeowners "is poorly targeted because it would give a credit to 5.5 million homebuyers who would have bought a home anyway."

The current credit was estimated to cost federal coffers $6.64 billion over 10 years. But Gayer notes that the cost is likely to be much higher since more people than expected took advantage of it but only about 15% of people wouldn’t have bought a house otherwise.

It would cost an estimated $16.7 billion if the credit is extended until the end of June 2010 and made available to single filers making up to $150,000 and joint filers making up to $300,000. Those are the parameters that Sen. Johnny Isakson, R-Ga., and Sen. Chris Dodd, D-Conn., are proposing in an amendment they introduced to a bill the Senate is expected to take up this week. (Please see correction.)

Another argument against an extension: It would only temporarily boost home prices and potentially set up those using it for a fall. That’s because home prices are likely to decline once the credit expires and interest rates ultimately trek north, according to Dean Baker, codirector of the Center for Economic and Policy Research.

"Temporarily propping up house prices, so that a new set of homebuyers can incur losses, is a policy of questionable merit," Baker said in a CEPR column.

The sooner the market adjusts the better, Baker said. He did offer one caveat: "We may want to step in to prevent prices from overshooting on the downside in a select group of markets where this is a real possibility."

Zandi said that’s already happened in a number of markets, and that an extended credit might help turn around the deflationary psychology in those markets where buyers are worried about catching a falling knife.

- CNNMoney.com’s Les Christie contributed to this report.

Correction:This article originally misstated Sen. Isakson’s home state.  

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Prime Minister Gordon Brown will say a Conservative Party plan to squeeze public spending and contain inflation risks putting the British economy through a decade of austerity.

Brown will reiterate to a panel of economists in London tomorrow the government’s commitment to halve the budget deficit within four years, with tax increases of about 14 billion pounds ($22 billion), asset sales of 3 billion pounds and cuts in spending that will begin to bite as soon as next year, according to remarks released by his office.

The comments mark an attempt by Brown to regain credibility with voters ahead of an election that must be held before June. Brown will say Conservative leader David Cameron is out of step with an international consensus on how to deal with the crisis and say his policies risk prolonging the slump, Britain’s worst since World War II. Cameron wants to go further and faster in tackling the shortfall.

“We need a deficit reduction plan that supports jobs and growth not one that snuffs out recovery before it has started,” Brown will say. “Restoring public finance sustainability must be done in a way that that supports growth not destroys it. The failure to do so is the real risk of a decade of austerity.”

Brown has trailed Cameron in every poll for the last two years. The latest, an ICM Ltd. poll in the News of the World showed the Conservatives up 5 percentage points on 45 percent, and Labour unchanged on 26 percent. Meanwhile a BPIX poll in the Mail on Sunday put The Conservatives on 43 percent and Labour on 29 percent.

Monetary Policy

Brown’s comments also extend to monetary policy where he will say that he will reject an early end to the Bank of England’s money printing program a month before the central bank decides on whether it needs to be extended payday loan company. Cameron last week said the central bank’s plan, know as quantitative easing, will have to stop “sometime soon” to prevent inflation spiraling.

The Treasury has authorized the central bank to buy 175 billion pounds ($278 billion) of securities with newly created money, aiming to rebuild bank balance sheets and stimulate the economy.

Bank governor Mervyn King will use new forecasts next month to appraise the plan, which prompted a split on the committee in August when King favored spending even more. Former Deputy Governor John Gieve said in an Oct. 6 interview that officials may consider an expansion in November because they will be wary of a “false dawn” for the economy.

Budget Deficit

Brown will reaffirm the U.K.’s plan to helve the budget deficit, which at 175 billion pounds next year will top 12 percent of national income, the most in the Group of 20 nations. He will point to studies by the International Monetary Fund that say that extra growth of 1 percent each year for a decade can reduce national debt almost by a third.

Aside from higher taxes and cuts in spending, Brown will say the government will sell off assets to reduce debt, confirming an announcement in the annual budget in March that the government will consider disposals of about 16 billion pounds.

Brown will say tomorrow that Tote, the student loan book, the Dartford Crossing over the river Thames, the government’s stake in the Channel Tunnel and in Urenco Group, the uranium enricher, will raise about 3 billion pounds.

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China will maintain its stimulative policy stance because the economy, far from being on solid footing, is facing fresh difficulties, Premier Wen Jiabao said on Monday.

In a downbeat statement on the government’s website following a trip to the eastern province of Zhejiang, known as a hotbed of private enterprise, Wen said Beijing would ensure a sustainable flow of credit and a “reasonably sufficient” provision of liquidity to support growth.

A drop in new yuan bank loans in July to 356 billion yuan ($52 billion), compared with an average of over 1.2 trillion yuan in each of the first six months of the year, has created worries among some analysts that the recent rebound in growth could be knocked off track.

“We must clearly see that the foundations of the recovery are not stable, not solidified and not balanced. We cannot be blindly optimistic,” Wen was cited as saying on www.gov.cn.

“Therefore, we must maintain continuity and consistency in macroeconomic policies, and maintaining stable and quite fast economic growth remains our top priority. This means we cannot afford the slightest relaxation or wavering.”

China still faced great pressure from the slowdown in demand for exports, Wen said, adding that it was difficult to boost domestic demand in the short term to fill in the gap — despite the boost from the government’s 4 trillion yuan ($585 billion) stimulus package.

Thanks to the pump-priming, annual economic growth in the second quarter accelerated to 7.9 percent from 6.1 percent in the first three months of the year.

Although the most important aim of the stimulus was to prevent a sharp drop in growth, Wen said its purpose was also to make China’s economic growth model more sustainable.

In particular, he said China would continue to increase fiscal spending on infrastructure and environmental protection.

“The impact of some short-term policies will fade gradually, but it takes time to see the effects of medium- and long-term policies, and there are many new difficulties and problems in economic operations,” he said.

The comments come amid volatility in the Shanghai stock market that has fanned worries the economy could be coming off the boil as the government reins in break-neck credit growth.

The Shanghai Composite Index ended up 1.1 percent on Monday after falling 2.8 percent last week in wide-ranging trading. It is now down by nearly 14 percent from its peak reached on August 4.

China’s latest economic data for July indicated that while growth was moderating after a strong second quarter, the recovery remained on track to achieve the government’s goal of 8 percent growth for the full year.

Central bank adviser Fan Gang said in remarks published on Monday that he expected growth to hold up at 8 percent next year as well, as property and corporate investment, together with rising exports, pick up the slack from waning government investment.

(Reporting by Zhou Xin, Simon Rabinovitch, Langi Chiang and Aileen Wang; Writing by Jason Subler; Editing by Kazunori Takada)

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For the first time in almost 15 years, the size of new homes built in the United States is shrinking.

New homes are now 7% smaller — or the size of one average-sized room. To be precise, the median square footage of newly built homes fell to 2,065 square feet in the first three months of this year, compared with the same period last year, according to the U.S. Census Bureau.

This caps off 2008, when home size fell every quarter, marking first year of declines since 1994. That could indicate that the romance between Americans and morbidly obese McMansions has finally cooled.

"A new ethic is arising right now that will become commonplace — as commonplace as is recycling today, when just a few decades ago it was rarely, if ever, done," said Sarah Susanka, author of the book, "The Not So Big House."

"As more and more people build or remodel homes that satisfy in quality rather than quantity, there will be a huge shift in what we perceive as desirable."

She believes the current shrinking trend mimics one of 100 years ago, when simple bungalows supplanted elaborate Victorian homes as the design choice for many Americans.

But, it could also just be the recession.

"Home size gains flatten out or decline during recessions, and we’re in the midst of the most serious housing recession in decades," said Kermit Baker, the chief economist for the American Institute of Architects.

It’s also hard to know whether the trend is a the result of a change in attitudes or a change in buyers, according to Kira McCarron, the chief marketing officer for Toll Brothers, an upscale homebuilder.

The recession could have led to a temporary turndown in the number of young families buying homes, for example. But when they return to the market, they may drive up McMansion sale again. Meanwhile, older buyers are dominating sales.

"The active adult product is taking a bigger share of the market right now," said McCarron, leading to more small homes and dragging the average new home-size data down.

She added that some cities, such as Seattle, have instituted "smart growth" plans that encourage development in core areas, leaving large patches of green, undeveloped territory further out.

Since it effectively limits development to a few, already densely populated parts of town, available land in those areas becomes more expensive, sending up the average per-square-foot of new homes cash loans. That, of course, discourages McMansion development.

Influencing factors

There are many practical reasons currently at work that favor smaller homes, according to Steve Melman, director for economic services for the National Association of Home Builders (NAHB).

Affordability: That drives everything, Melman said. People tend to buy as much home as they can comfortably afford and, with the economy in turmoil, they simply don’t feel at ease spending today.

Energy costs: When the price of oil rose to more than $147 a barrel in July 2008, it drove up all the costs of homeownership. Heating and cooling costs soared, but so did electricity costs. And bigger houses have more lights and appliances. Energy costs also contributed to price increases on building materials, making bigger homes that much more expensive to construct.

Aging boomers: Demographics may have contributed to the smaller home trend. More and more aging baby boomers have become empty nesters. Some of them are downsizing, according to Melman.

Tight credit for big mortgages: Jumbo loans needed to pay for these types of houses have been harder to get and more expensive. That would discourage building in this category.

No real sacrifice

But small-home buyers don’t have to sacrifice if the house is well designed, said Susanka. "If you use a room less than six times a year, you don’t need it," she explained. "Or make it do double duty."

A rarely used formal dining room, for example, could double as a library. A den could be where the kids do their homework. And do you really need a separate living room, family room and home theater?

"Houses are likely to become better tailored to the way we actually live," she said. "As more and more people build or remodel homes that satisfy in quality rather than quantity, there will be a huge shift in what we perceive as desirable. Just as the bungalows of a century ago supplanted the Victorian painted lady, ‘Not So Big’ houses are likely to become the sought after alternative to the McMansion." 

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OTTAWA–Automotive entrepreneur Frank Stronach wants Ottawa to loan him hundreds of millions of dollars so he can start manufacturing electric cars in Canada for a world market in as little as three years.

Stronach met with reporters today to show off an electric Ford car containing an electrical system developed by his company Magna, which is best known for its automotive parts production.

"About two and a half years ago we made a commitment to be in the electric car business in a very serious way," he said.

Stronach, who was vague on whether he planned to meet with Prime Minister Stephen Harper, envisaged that in six years about 15 per cent of all vehicles sold will be electric and in 12 years that will jump to 30 per cent.

"I am very confident that Magna will be amongst the leaders in selling and building electric cars," said Stronach, who is expected to soon take over General Motors’ Opel subsidiary in Europe.

"We are not here for a grant … I would like to see that the first electric car facilities are in Canada. If could get a loan we know we could speed it up. We could make sure it’s going to be in Canada," he said, adding he is being courted by several states in the U.S. and by European countries.

Stronach, who is even toying with the idea of building Opels in Canada within two years, said it will cost up to $300 million to get into electric car and battery production.

"First of all we’d like to supply all car companies with electrical systems but we also have the intention to build electric cars. So that’s our intention and that needs a fair amount of money. And I hope maybe half of the money we could borrow under reasonable conditions instant payday loans."

The energized 76-year-old Stronach said a person doesn’t have to be a "great scientist" to understand that the world’s supply of oil is running out sooner than later.

He said Magna has signed an agreement with Kokum Lithium-ion Batteries to secure all the rights, present and future, giving the Canadian company the right to make the fuel cells because "we do not want to be subject by any other company that they could cut us off."

Meanwhile, in what Stronach described as the biggest move of his career, Aurora-based Magna reached a tentative deal late Friday to invest 300 million euros, or $470 million for a 20 per cent stake in Opel AG, GM’s main operating unit in Europe.

Sberbank of Russia, which is Magna’s partner in the deal, would hold 35 per cent while GM would retain 35 per cent. Opel employees would get the remaining 10 per cent in a deal that should close in two months.

The German government is providing $1.5 billion euros in loans to keep Opel alive and protect several plants and about 25,000 jobs in that country. Under Magna’s agreement with GM to buy Opel, it is not allowed to sell Opels in the U.S. or China.

As an aside, Stronach told reporters that the federal and Ontario governments did the right things by kicking in a total of $10.6 billion to help out flagging General Motors.

"If they would have gone bankrupt and was sold in bits and pieces the spin-off effect may have been a few million jobs between Canada and the United States. Under the circumstances, I think it was the right decision to do," he said.

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