Lord Reid urges BAE merger probe as jobs fears rise "It is very tentative and very early, but it is absolutely something that ought to be investigated, tried and tested over the weeks up to October 10 to see if these difficulties ought to be resolved, because they are both operating in very difficult markets, up against huge competitors like Boeing," he said on BBC Radio 4's Today programme. Lord Reid said the deal had "commercial appeal" as BAE has been suffering from defence cuts in Britain and the US and could benefit the Airbus owner's strength in civil aviation. He warned that BAE could still face job cuts even if the merger collapsed, due to the shrinking defence market worldwide. Ben Wallace, a Conservative MP, whose Wyre and Preston North constituency in Lancashire is home to many workers at BAE's nearby Warton base, told Today the merger could cost UK jobs and upset Britain's defence relationship with the United States. Mr Wallace said: "EADS has two big government stakes in it - France and Germany - and BAE does not. It is important that we get to the bottom of what safeguards the UK will seek, and indeed whether our very important defence relationship with the US is threatened or strengthened by this merger. France and Germany have different employment laws and different employment protections ... (and) French unemployment is reaching 13pc. When they start identifying overlaps, what I don't want to see is the French sweeping in and saying we will just get rid of the British workforce - such as my constituents - because it is easier to do or because we are the dominant partner in this relationship and therefore we choose to have it in Toulouse or Germany. He said: "We have to be cautious that this is not just a grab for BAE's American business and a grab for the only other big defence spender in the West, which is Britain." Lord Reid, the former Labour Cabinet minister, said: "In a commercial sense, this appears very appealing, because it creates a huge European aerospace and defence and civil airline manufacturer. They are complementary. EADS is well grounded in civil airliners and BAE in the defence side, and they are also complementary geographically. In commercial terms it appears to make sense, but there are a large number of complexities and obstacles and difficulties to be overcome, not least on the political side. A key issue will be whether the US Government regards the merger as a threat to its own defence interests, he said. On Thursday, leading investors in BAE Systems warned that a potential merger risked harming the long-term interests of the British defence giant and its shareholders. BAE shares, which fell BAE fell more than 10pc yesterday as investors balked at news of the merger, rose 3.5pc on Friday. The company must win the backing of the British, US and European governments before shareholders can vote on the deal. Investors are concerned about the level of political interference in the new company, given that 50.14pc of EADS is effectively controlled by the French, German and Spanish governments. Analysts said the proposals put BAE in play as a bid target for US defence groups such as Boeing or Northrop Grumman. "BAE management have shown an openness to ideas," said Edmund Salvesen at Brewin Dolphin.