The French government yesterday agreed to give Ren-ault and Peugeot-Citroën €3bn ($3.9bn) each in preferential loans in return for maintaining jobs and sites in France in the biggest, most controversial auto industry bail-out so far in Europe.

Under the scheme Renault Trucks, owned by Volvo, will also get a loan of €500m, suppliers will get loans of €600m and the financing arms of the two carmakers will receive loan guarantees of €2bn. Direct loans to carmakers will be for up to five years at 6 per cent interest.