The centrepiece of the Government’s plan to unclog Britain’s money markets could be disrupted by European regulators because it falls foul of state-aid rules, competition lawyers said yesterday.

The Bank of England’s scheme to free up Britain’s home loan market by injecting £50 billion into the banking sector risks contravening the rules because it gives unfair advantage to British banks over rivals, experts say.

If the European Commission were to find that the package breaches its rules, it could order that the loans be paid back more quickly than expected, and at penal rates of interest.