German chancellor Angela Merkel defends Germany's reputation as a good place for business after the VW scandal

 
Jessica Morris
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The British government is investigating the extent of emissions-rigging by VW (Source: Getty)

German chancellor Angela Merkel has said that the emissions scandal engulfing German carmaker Volkswagen is "drastic" but shouldn't damage the country's reputation as a good place to do business.

"I believe the reputation of the German economy and the trust in the German economy has not been shaken by this to the extent that we are no longer considered a good business location," she told German radio station Deutschlandfunk, according to the text of an interview due to be broadcast later on Sunday.

Read more: Are VW shares untouchable?

VW sparked the biggest crisis in the company's 78-year history after admitting it had cheated diesel emissions tests in the US. The Wolfsburg-based company has since said it will recall up to 11m vehicles worldwide, and around 1.2m of these - including Audi, Seat, and Skoda cars - are in the UK.

The British government is investigating the extent of emissions-rigging and whether the software is being used by other manufacturers. At the same time, it has said there hasn't yet been any evidence of this.

Last week the government said that British owners of Volkswagen diesel cars fitted with emissions-cheating software will not face a higher annual vehicle tax.

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