BRUSSELS (AFP) - Business Secretary Peter Mandelson on Thursday warned that there must be a "fair balance" of jobs lost and state aid put in under the restructuring of General Motors Europe.

GM says it will have to cut some 10,000 jobs out of a workforce of around 50,000, after pulling out of a deal to sell its European operations to Canada's Magna and Russia's Sberbank.

The GM decision could affect Vauxhall's 5,500 workers that are mainly employed at car plants at Luton, and Ellesmere Port, near Liverpool.

The company is also looking for 2.69 billion pounds in state aid, from the German government and other European countries where Opel and the Vauxhall division have plants.

"Whatever happens, we must see an appropriate commercially-based judgment being applied to redundancies, which will take place in the context of restructuring," Mandelson told reporters in Brussels.

"We need to see a fair balance amongst the member states' governements that will be underwriting the company financially.

"And that is of course something that we have yet to discuss amongst ourselves and with the GM management."

Merkel's government had invested major financial and political capital in saving Opel from insolvency before a September general election which she handily won. About half the company's employees work in Germany.

Beyond pledging 4.04 billion pounds in German state aid for the ailing company, Berlin spent months shepherding a rescue deal -- but the European Commission smelled a rat over conditions it believed applied.

"I think that the intervention of the commission in questioning the Magna deal and the way in which it was undertaken was one element in the GM board's decision," Mandelson added.

He said new negotiations over state aid would lead to a "significantly less costly deal for European taxpayers, notably German, British and Spanish taxpayers."