Manufacturing body EEF said a deal that saves troubled auto firm Jaguar Land Rover might still not be enough to prevent chaos on the supply chain.

A banking source has claimed that the Government is putting pressure on nationalised banks to supply £500m in funding JLR needs to continue trading.

A source told the Birmingham Post the government expects the majority taxpayer-owned Lloyds and RBS to put up the money the carmaker needs to plug its cashflow problems.

The news comes just a day after the European Investment Bank agreed a £340 million loan to develop green technology, in a move that was guaranteed by the Government.

But Martin Wassell, the Midlands region director for EEF, said if a loan could be arranged it would be a huge boost for JLR, but added: “This is only a temporary reprieve for many in the supply chain. Acute pressures remain and threaten to undo the great strides made by manufacturers in recent years to improve their performance.

"The need for short-term measures to have an immediate impact is therefore becoming increasingly urgent.

"The chancellor in his budget should focus on minimising additional costs on businesses, alleviating cashflow pressures facing manufacturers and supporting vital long term investment.

"In addition, the Government should introduce a temporary scrappage incentive scheme for the motor vehicles sector.”