Nissan aid 'wins approval'

The grant would help to save jobs at Nissan's Sunderland plant

Nissan's Sunderland plant is to be handed a lifeline on Wednesday, when a £40m aid package is approved by European watchdogs, a newspaper said.

Trader regulators at the European Commission are to approve a grant from the UK government aimed at preventing the Japanese carmaker slashing production, the Financial Times said.

While the Sunderland plant is one of the most productive in Europe, Nissan has threatened to shift production of its new Micra model abroad, threatening more than 1,000 jobs at the factory.

The company has said that, thanks largely to the strength of sterling, it might be better off relocating work to its operations inside the eurozone.

A Renault factory in northern France is seen as the most likely alternative.

Aid package

Government officials, who have held a series talks with Nissan chiefs, have proposed the £40m grant in a rescue package to keep the Micra at Sunderland, in north east England.

Because of EU fair trade regulations, the grant requires commission approval.

But Nissan has warned that the cash may not be enough to save the £200m contract.

The government believes Nissan's decision rests as well on the firm's forecast for the future strength of the euro, and of the chances of the UK adopting the European single currency in the near future, the FT said on Tuesday.

Nissan currently manufactures 330,000 cars a year at its Sunderland plant, which employs 5,000 staff.