Plans for the Swedish government to guarantee a £350 million loan to Saab from the European Investment Bank have been approved.
The European Commission ruled that 83 per cent of the loan was in line with temporary EU rules on state aid measures, drawn up to help companies through the economic and financial crisis. The remaining 17 per cent will be provided on market conditions.
"The state guarantee will contribute to the implementation of Saab's business plan without giving rise to any undue distortions of competition," said EU Competition Commissioner Neelie Kroes.
He added that Saab will pay "an adequate remuneration" for the guarantee and provide sufficient securities in case the guarantee would be drawn.
The Swedish loan has only been offered on condition that Saab produces less polluting and more eco-friendly cars.