The guarantee, announced by State for Business Peter Mandelson today, will boost Ford’s chances of securing a £450 million loan from the European Investment Bank.
If successful, Ford will use the money to invest in CO2 reducing technology research and production at the four UK Ford facilities.
In particular, the research facility at Dunton, Essex will now focus on researching low-CO2 technology, such as the sub-100g/km diesel engines manufactured at the Dagenham plant and currently featured in the Fiesta and Focus ECOnetic models.
Although no Ford models are assembled in the UK, the low-CO2 EcoBoost petrol engine, set to be fitted in the new Ford C-Max this year, will be produced in Bridgend.
Ford of Britain chairman Joe Greenwell, welcomed the investment: “Our customers will benefit from this extensive investment and so too will the 100,000 people in the UK whose jobs are directly or indirectly dependent on Ford.
"The loan also encourages the growth of high-technology, CO2-reducing research and development in the country," he added.
Greenwell also praised the Government for supporting the EIB loan application, stating it will benefit both the employees of Ford and the environment through ‘mass deployment, (of) volume-produced emission-reducing technologies’.
The news of the investment plans come in the same week Nissan has confirmed the Leaf will be produced in the Nissan Sunderland plant after months of speculation.
Car production in the UK has risen for the fourth successive month according to figures from the Society of Motor Manufacturers and Traders which show a 62.7 per cent rise in car output for February 2010.
The increase is mainly due to the strengthening of the pound, meaning UK-built models are more competitive in the international market, the SMMT says.