Retail group Arcandor said that talks with Metro over a possible merger of the Karstadt and Kaufhof department store chains is no alternative to government aid. Arcandor spokesman Gerd Koslowski said: “Metro would have to bring the money we need for survival and it really doesn’t look like that at the moment.”

The group’s chief executive Karl-Gerhard Eick entered into talks with Metro chief executive Eckhard Cordes this week. Arcandor, owner of Karstadt and mail order business Primondo, is seeking financial guarantees from Berlin before a credit line worth E650m (£572.7m) expires on June 12.

Metro said it opposes state guarantees for Arcandor. Cordes and Eick were set to meet again at a later date as Retail Week went to press.