The prospects for Rover in the future are excellent John Major, Prime Minister

Politicians on both sides are concerned the plan will leave the UK as the only Group of Seven nation without control of a leading car manufacturer.

Conservative Prime Minister John Major defended the proposal saying: "The prospects for Rover in the future are excellent. The new arrangements will provide new export markets and more investment."

The new Rover group, with a total of 100,000 employees, will produce more than a million cars a year worldwide and will be Europe's seventh largest car maker.

BMW has told the Board of Trade the 33,000 jobs at Rover's three UK plants - in Birmingham, Oxford and Swindon - will be safe, along with future models in development.

BMW made their secret bid to buy out BAe 10 days ago, at around the same time as BAe's long-term partner, Honda, put forward proposals to raise its stake in Rover to 47.5%.

The Japanese car giant has held a 20% share in the company for the last 14 years but has long been resistant to taking a majority share.

Rover chairman George Simpson flew to Tokyo as soon as the BAe board agreed - last Thursday - to accept BMW's offer.

British Industry Minister Tim Sainsbury said: "I would like to reassure any Japanese investors that as far as this country is concerned we will continue to welcome Japanese investment."

A statement from Honda said: "Now our partner has been acquired by a competitor we must start to reassess our entire operations in Europe."

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