France and Germany lined up bailouts worth €14bn to take equity stakes in big industrial companies, as Britain drew up a similar plan, known as Project Birch, to prop up strategic firms stricken by the coronavirus crisis.
As the main eurozone economies intensified support for struggling companies, carmakers and airlines are first in line. The crash in sales makes companies with high fixed costs and low margins highly vulnerable.
Germany’s Government is set to take a 20pc stake in exchange for a €9bn (£7.9bn) rescue of flagship airline Deutsche Lufthansa, while its operations in other countries are also in talks over aid.
Meanwhile the French Government, which already holds a 15pc stake in the car aker, has offered Renault a €5bn loan. It comes with conditions including joining a battery development project.
Experts say Britain could see French and German bailouts for key industries as a model for upcoming rescue packages in the weeks ahead, as Whitehall officials work on similar plans to take stakes in key companies as a “last resort” to prevent bankruptcies.
Jaguar Land Rover is at the front of the queue as the company seeks a £1bn loan which could come with convertible elements potentially leaving taxpayers holding a stake in the business.
Energy suppliers have also called for a state bailout as shuttered business customers demand less power while unemployed workers are more likely to be unable to pay their bills.
The airlines industry has written to the Government to ask for a reprieve from planned quarantine measures which would put further pressure on their already strained finances.
It would mark a radical change of approach for the Government which has so far relied on grants and loans to support companies and jobs.
However businesses with large debts or other problems are not always able to take advantage of the support on offer. It means the taxpayer could benefit from any rise in the value of businesses over the years to come, but may also end up holding shares mainly in the most troubled industries.
For instance, the Government remains the majority shareholder in RBS more than a decade on from the financial crisis, with little prospect of turning a profit on that investment.
Unite, the trade union, said the plan is “very welcome”.
“There is no more time to lose if we are to prevent a tsunami of job losses from sweeping through communities this summer,” said Steve Turner at the union.
“If these moves put a financial floor under major employers and their vast supply chains then we have the beginnings of a plan taking shape.”