The British car industry will suffer a fresh blow today when new figures are expected to show that sales fell by more than 20 per cent last month. The sharp drop coincides with mounting concern over whether the Government will deliver an aid package that had been expected before Christmas.

Worries are increasing over the future of components makers that are thought to have been hit badly by the lack of bank lending. Jaguar Land Rover, the luxury car division owned by the Tata conglomerate, has also told the Government that it needs credit urgently.

It is feared that a rescue package for the industry that the Department for Business drafted has caused alarm in the Treasury, which is concerned that industry-specific aid packages could be challenged by other hard-pressed sectors that could make a case for government assistance.

Paul Everitt, the chief executive of the Society of Motor Manufacturers and Traders (SMMT), warned before Christmas that the car industry was facing a “national emergency”. All British carmakers have been or remain on extended Christmas shutdowns to reduce output in the wake of plummeting sales worldwide.

The 20percent sales drop of last month is in line with the falls of September and October but marks a mild recovery from November, when sales crashed by 37 per cent. It is thought that the reduction in the level of VAT may have enticed some buyers.

The December sales figures will take the total new sales for last year to just over 2.1million, down from 2.4million in 2007. However, last year got off to a strong start, with sales falling away badly only from August. Car chiefs are expecting no relief this year, and sales are projected to fall to between 1.8 million and 1.9 million vehicles.

In the week before Parliament rose for the Christmas recess, the expectation had been high that there would be government help. Now, however, industry insiders say that the picture is confusing and that there seems to be a reluctance in Government to make a decision.

Industry and the unions are expected to increase the pressure for assistance as the crisis in the sector moves up the political agenda.

Industry chiefs, employers' groups and unions will meet Gordon Brown next Monday to try to work out ways of ensuring that the coming surge in unemployment is as short-lived as possible. Up to 100 executives from some of Britain's leading companies, the CBI and the TUC will discuss how people who lose their jobs in the coming months can be supported in the short term and helped to find new jobs with retraining.

A senior official said that the Government wanted to prevent a repetition of the recessions of the 1980s and 1990s, during which short-term increases in the jobless totals were allowed to become long-term problems.

“All the evidence shows that once people have become unemployed for a few months, they get used to the idea and it is harder to get them out of it,” the government official said. “Yes, unemployment will rise, but tens of thousands of jobs a month are still being created and we need to use that to ensure that people get back into the labour market as soon as possible.”

Companies that will be represented at the jobs meeting on Monday include IBM, Centrica, Motorola, Rio Tinto and Pfizer. With the Government close to announcing fresh moves to boost lending by the banks, probably through a credit insurance scheme, companies will use the gathering to urge Mr Brown to be as ambitious as possible.

John Cridland, the deputy director-general of the CBI, said last night: “You can't have jobs without wages and companies to pay them. The Government must take immediate steps to get credit flowing through the economy again, and this must be the priority.”

Toyota has been forced to suspend production at several factories in the face of the strong yen and rapidly collapsing global car markets (Leo Lewis writes).

In a move that is likely to be repeated across much of the struggling Japanese automotive industry, the Nagoya-based group said that all 12 of its Japanese plants would close for 11 days between February and March.

Industry insiders said that 11 days, over two periods, is the longest a big car plant can be suspended. Any longer and the fixed costs start to demand permanent closures and radical cuts in the workforce.

Car sales in Japan have fallen to their lowest levels since the 1970s in a decline that began well before the global economy started to erode.

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