The Swedish government will offer automotive companies Skr25bn ($3.1bn, €2.4bn, £2.1bn) in loans and loan guarantees to ensure the future of domestic car manufacturing.

The move follows the announcement of thousands of redundancies in the Swedish automotive sector and reflects the continuing uncertainty over the future of Saab and Volvo. Both marques are loss-making and their US parents, GM and Ford, are seeking $14bn in emergency aid from the US government.