The UK Government yesterday ruled out subsidies for nuclear power or market mechanisms such as a "nuclear obligation" requiring suppliers to buy a set proportion of their needs from nuclear stations, raising doubts as to how a new generation of reactors might be built.

The nuclear lobby claims that a streamlined and shortened planning and licensing regime is all that is needed to make a new construction programme viable. But City experts believe it will require government guarantees before any private investors will put money into the nuclear industry once again.

As recently as the 2003 energy White Paper, the Government said that "the current economics of nuclear power make it an unattractive option for new generating capacity".