GENERAL Motors has scrapped plans to sell its European arm in a move that could save thousands of British jobs.

The car manufacturer stopped short of a deal to sell Vauxhall and Opel to a Canadian-Russian consortium at the 11th hour.

The decision came as a huge surprise. GM bosses have appeared desperate to sell in the last few months.

The company said it had pulled out because the market was showing signs of improvement.

Union officials said the decision was a huge boost to hopes that Vauxhall's two plants at Ellesmere Port and Luton would remain open.

There had been fears that the new owners would sacrifice a UK plant to save jobs in Opel.

The news is also an embarrassment to the German government which provided billions in loans to help the buy out led by Canadian parts manufacturer Magna.