Image copyright Vauxhall

Prime Minister Theresa May has agreed to meet the head of France's PSA Group to discuss its planned takeover of Vauxhall in the UK.

PSA, which includes Peugeot, wants to buy General Motors' loss-making European arm, which includes Vauxhall plants at Luton and Ellesmere Port.

There are fears that the deal could lead to job losses.

Carlos Tavares, boss of PSA Group, is also set to hold talks with Unite union leader Len McCluskey.

The company said it was engaged in a "constructive dialogue" with all parties.

'Pressing UK's case'

Vauxhall employs 4,500 workers at the two UK plants, with thousands more involved in its retail and components chain.

A Downing Street spokesman said a request for a meeting with Mr Tavares had been received, adding: "The meeting will take place, in principle, subject to diary availability."

Unite general secretary Mr McCluskey said he was pleased Mr Tavares had "responded speedily and positively" to his request for a meeting to discuss Peugeot's intentions.

He said he would use the meeting to press the case for the UK's "world class facilities and workforce".

Analysis

Image copyright EPA

Business correspondent Joe Lynam

Apart from meeting the prime minister, PSA will also see Germany's Angela Merkel. It could end up like a corporate beauty parade as Britain and Germany hope to persuade PSA not to shut factories in their respective countries.

That's now a real possibility after General Motors said this week that it was in talks to sell its European brands of Opel and Vauxhall to PSA.

European car manufacturers have far more production capacity than they need and PSA will probably want to consolidate its factories if it acquires GM Europe.

Vauxhall's factories in Ellesmere Port and Luton are both very efficient, but they could face export tariffs when Britain leaves the single market, and probably the customs union, in two years - making those plants unviable.

PSA said it was engaged in a "constructive dialogue" with all parties in the bid for GM's European division, which includes German-based Opel as well as Vauxhall.

A spokesman said: "Our intention is to establish the same maturity in our exchanges in France, Germany and the UK.

"This is why Carlos Tavares has asked to meet Theresa May as it was done with German authorities."

'Cut a deal?'

David Bailey, professor of industrial strategy at Aston Business School in Birmingham, told the BBC that a deal would not be straightforward.

"I think it's inevitable if this deal goes ahead that there will be plant closures. The plants in the UK look particularly vulnerable because of flexible labour markets and uncertainty over Brexit," he said.

"So the government I think at some point will have to cut a deal with Peugeot, as it did with Nissan, over things like skills, innovation, rebuilding the supply chain.

"And basically, what Nissan got, whatever it was, every other car producer in the UK will be looking for as well."