Britain is used to being on the side of Europe’s free-market angels over state aid. Having privatised most of its state sector, the UK rarely has to skirmish with the European Commission over subsidies. But the fact that billions of pounds of Bank of England loans to Northern Rock could endure until at least 2010 will catch the eye of the Brussels authorities. So it should. The UK cannot frown at French subsidies or grumble about German loan guarantees and then count on a benign nod when it lends £20bn to its own stricken bank.

It would be unwise for the Commission to be too draconian, too soon, however. The last thing Eurocrats want is to be blamed for driving Northern Rock – and with it part of the European banking system – to the wall. European Union rules allow for six months of “rescue” aid, plus restructuring aid, if a recovery plan is approved by Brussels and “restores [the company’s] viability in a reasonable time period”. But the Commission can impose conditions. That is where the difficulties may start. According to Robert McLeod, editor-in-chief of MLex Market Intelligence, a Brussels-based regulatory news service, the “rule of thumb” is that banks should make disposals equivalent to four or five times the economic value of the aid granted. That could clip the wings of Blackbird – investment bankers’ codename for Northern Rock – and further complicate the already complex sale process.