Ford Motor has confirmed that it will build its new Jaguar X400 small car at its Halewood plant in Merseyside.

The BBC's Stephen Evans reports on the significance of Ford's decision (Dur: 26")

The decision will ensure all Jaguar products continue to be built in Britain.

It will also safeguard around 1,800 jobs at the Merseyside plant.

A key factor in securing the £400m project for Halewood was the British Government's readiness to provide significant financial support.

The new deal will effectively transform Halewood into a Jaguar factory

Ford and Jaguar are believed to have sought £80m, but the Government's package is reckoned to be about £50m.

The European Commission is expected to approve the package because Halewood is in a special development area.

The UK faced stiff competition for the project from Ford's Cologne factory in Germany and from two Ford plants in the United States - Lorain in Ohio and Wixom in Michigan.

Both Alex Trotman, Ford's chairman and Jac Nasser, its Automotive Operations Chief, are believed to favour the British plant.

Last February, Ford stepped back from a threat to cease car production at Halewood.

Instead, the company agreed to keep Halewood as the site for a new "multi-activity" vehicle based on the next generation Escort.

In spite of the deal, Ford dropped Halewood for the main Escort range and cut around 1,000 jobs.

The new deal effectively transforms Halewood into a Jaguar factory, allowing Ford to relocate its multi-activity vehicle elsewhere in Europe.

Chairman of Ford UK, Ian McAllister, tells BBC TV News what swung it for Halewood (Dur: I'42")

The X400 is Jaguar's planned rival to small executive saloons like BMW's 3 Series and the Audi A4.

Output is expected to hit 100,000 cars a year by the turn of the century.

The Halewood move will cap a heavy investment phase at Jaguar, bought by Ford for £1.5bn in 1990.

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