Jeremy Warner: Car makers beg for state assistance

Outlook The age of state intervention is back with a vengeance. Not that the Government is a particularly willing intervener, despite Labour's socialist roots. Rather, circumstance is forcing intervention on reluctant ministers. Almost unbelievably, given their natural aversion to anything to do with the state, the severity of the downturn is causing business leaders to start queueing at the Government's door, cap in hand, begging for assistance.

The latest to demand help are the mainly foreign-owned motor manufacturers. It is not entirely clear what they are after, but there is no doubting their desperation. Nobody's buying their cars, and almost as bad, they are finding it increasingly hard to borrow the money needed to stay in business. As such, they are battling on two fronts. They need the consumer credit markets to revive so that people start buying cars again, and separately, they need the banks to provide them with the loans required to finance ever greater stocks of unsold cars. There was just a taster of what is to come if neither of these demands are met with news yesterday of 850 Jaguar-related job losses.

Meanwhile, suppliers of all goods are asking the Government to follow the example set by France and underwrite credit insurance. As things stand, there is a real danger of the entire supply chain freezing up, rather in the manner that interbank lending already has. Producers won't supply distributors they think might go bust without insurance which the credit markets are increasingly unwilling to provide.

Right through the system, normal market mechanisms seem to be failing as confidence drains away. Sheepishly, business is being forced to turn to the Government to sort out the resulting mess. Not since Margaret Thatcher came to power in the late 1970s determined to roll back the frontiers of the state has there been such a seminal change in the commanding heights of the economy. The frontiers of the state are all of a sudden marching ever outwards again.