Sweden acts to save Volvo and Saab

• Government's £2.3 billion rescue package
• Money in form of credit guarantees and loans
• Research and development funds will be topped up, too

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Volvo and Saab have secured a 28 billion kronor (about £2.3 billion) state bailout to help them cope with falling demand.

The struggling Swedish car makers had asked for aid because of the financial woes being experienced by their US owners. Volvo is owned by Ford and Saab by General Motors.

The plan consists of a maximum of 20 billion kronor in credit guarantees and up to five billion kronor in rescue loans.

The country's Government said it would also earmark three billion kronor in research and development funds for the car industry.

The Swedish Government had previously said it would wait on a US decision before announcing any measures of its own, however, the latest rejection of the US plan forced it to announce a domestic rescue package.

The Government reiterated it would not take over the struggling companies.