Malta has emerged as the most generous country, when subsidies are calculated as a share of gross domestic product, with 3.1 per cent, followed by Hungary, Finland and Sweden.

The Financial Times reported last Monday that European governments have again defied pressure to cut state aid payments to the private sector, according to a report showing that they spent a total of e64bn on subsidies last year.

The latest figures, revealed by the European Commission on Monday, came as a disappointment to Brussels, which has waged a long and often acrimonious campaign for “less and better-targeted state aid”.

All but the smallest of state aid payments must be notified and approved by the Brussels regulator, which has argued repeatedly that subsidies often end up distorting competition and leading to an inefficient use of capital.

The Commission’s powers in this area have frequently sparked clashes with member states, for example when France bailed out Alstom, the engineering group, or Germany was fighting to defend the special protection enjoyed by the publicly owned Landesbanken.

Brussels’ hard line against government aid paid off in the late 1990s, and overall state aid in the EU dropped to less than e50bn a year in 2000 and 2001.

More recently, however, governments have again raised their support for the private sector, with the 25 EU member states spending e63.8bn on subsidies in 2005, almost unchanged from the previous year.

Germany was again by far the biggest spender, accounting for e20.3bn of subsidies. It was followed by France with e9.7bn, Italy with e6.4bn and Britain with e4.5bn.

Despite the setback on total aid payments, the Commission can claim some success in its drive to reduce the most distortive types of subsidies, such as payments to individual ailing companies.

Monday’s report found that half the EU’s member states now distribute more than 90 per cent of their government aid through “horizontal” schemes such as programmes to aid research and development or the environment.

Such schemes, which benefit more than one company, are viewed as less distorting by the Commission.

By contrast, rescue and restructuring aid – which is used to bail out and reinvigorate failing companies – accounted for only e15.5bn of subsidies, and was centred once again on groups in Germany, France, Spain, Britain and Italy – the EU’s five biggest economies.