Bloomberg News reports that the Italian government is said to be moving towards a preference for unemployment aid and other incentives over direct investment, to help Fiat overcome its financial troubles.

The government is under pressure from Italy’s labour unions to help rescue the ailing carmaker and prevent the closure of plants.

There have been conflicting reports lately about what the government’s preferred solution is, but speculation of an outright stake by the government has been fuelled by ministers’ comments in the Italian press. However, analysts say that the danger of a derailment of Fiat Auto’s alliance with GM following a change in ownership may be prompting a more circumspect approach from the government.