BRUSSELS: The European Investment Bank (EIB), the EU’s lending arm, yesterday proposed to increase loans to Europe’s ailing auto sector as part of a broader financing plan.

“The EIB will propose an increase of 20-30 percent, and that corresponds to 10 to 15bn euros,” more money for both 2009 and 2010 -- including help to small- and medium-sized businesses—a spokesman for the Luxembourg-based bank said. Part of the money would be earmarked to help the transport industry, especially for the development of greener cars, the spokesman said, without giving an amount.

The initiative comes days after the announcement that new car sales in Europe tumbled 14.5 percent in October as the global financial crisis plunged the eurozone into recession. The European finance ministers will pronounce on the plan at their next meeting on December 2, the spokesman added. The EIB has handed out an average of two billion euros in loans to the automobile sector in the past three years. Last month, the European automakers association ACEA called for 40 billion euros in loans to finance cleaner cars.

French Finance Minister Christine Lagarde, whose country currently holds the EU rotating presidency, said Monday that support for the sector was first of all a matter for the EIB, which was working on the dossier. European Commission chief Jose Manuel Barroso said Friday that the EU is ready to take action at the World Trade Organisation if it judges that US aid for its struggling auto industry is “illegal.”

The US Congress approved an aid package worth 25 billion dollars in September to help the auto industry invest in new generation technology but no timetable was fixed for payments to be made.

Meanwhile, European automakers — who have cast an envious eye at the US plan and called for similar action at home — have been forced to close factories and cut jobs.