Talks to secure thousands of jobs in Vauxhall and Opel have broken down in acrimony after the German Government accused the US parent company, General Motors (GM), of "scandalous" behaviour by requesting extra state aid.

Peer Steinbruck, the German Finance Minister, said this morning: "We were unpleasantly surprised when this new demand came out of the blue. We found that pretty scandalous."

The German Government, which faces a federal election in four months, had already said that it would provide billions of euros in state guarantees for the winning bidder, with Fiat, the Italian carmaker, and Magna, the Canadian car parts manufacturer, now competing for the business after Ripplewood Holdings, the American private equity group, pulled out.