Mandelson fuels clash with US over Airbus aid

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A long-running dispute between the European Union and the US government over state funding for large aircraft makers threatened to reignite yesterday after Lord Mandelson offered Airbus more than £300m of aid while attacking US "subsidies".

The business secretary pledged £340m of repayable launch aid to Airbus, owned by European conglomerate EADS, to help it develop the A350, a family of long-haul jets that will compete with Boeing's successful 777 aircraft and its new 787 Dreamliner.

Speaking at the Airbus plant in Filton, near Bristol, Lord Mandelson hailed the aerospace sector as "one of the UK economy's crown jewels" and said the government "investment" would safeguard thousands of British jobs.

The move comes at a sensitive moment in EU and US relations. The World Trade Organisation is due to make an interim ruling on US claims that soft loans to Airbus violate trade rules. A European countersuit could be concluded by the end of the year.

Lord Mandelson insisted that the UK government funding represented an investment and not a subsidy. "We know about subsidies," the minister said. "You only have to go to the United States to see the sort of subsidies that are provided to Boeing."... FT