Britain’s car industry is to be forced to share the costs of a £2,000 “cash for bangers” scheme in Wednesday’s Budget, a move dismissed in advance by manufacturers as a disaster for the sector.

Alistair Darling, chancellor, has reluctantly agreed to fund the scheme to boost demand for new cars, following France, Germany and Italy in introducing a so-called scrappage plan to persuade motorists to trade in their old cars vehicles.