Last night we heard that General Motors (GM) has confirmed that it will be cutting 10,000 jobs across Europe, but hasn’t yet given any indication of which plants will be affected. This comes just one day after the company withdrew its sale of the European brand Opel to the consortium of Canadian parts-maker Magna and Russian bank Sberbank.

The news reflects badly on German Chancellor Angela Merkel, as she had lobbied heavily for the sale in order to protect jobs across the country. Her government had also awarded GM a €1.5 billion bridge loan to keep the company afloat in return for a promise to keep all four German factories running. With her reputation now on the line, this could be her biggest political setback since winning the re-election in September.

There’s been a great deal of damage done to the Opel brand in Germany, and GM is going to have to put a lot of time, effort and money into rebuilding its reputation. GM will have to work hard to regain the trust of the German people (who tend to be fiercly patriotic and buy accordingly). Its home country is its biggest market, but with so many job losses on the cards – this close to Christmas – it will hardly encourage sales figures to rise.