Blair in talks over Nissan jobs

An aid package could help secure Sunderland's future

Senior officials from car company Nissan have met Prime Minister Tony Blair to voice their concerns about the strong pound and Britain's stance towards the European single currency.

At stake are thousands of jobs in Sunderland. Nissan has said it may not build the new model of the Micra there, because the strength of sterling is eating into profits.

Nissan chief Carlos Ghosn had a 45 minute meeting with Prime Minister Tony Blair and Trade Secretary Stephen Byers. A government spokesman said afterwards the prime minister had made clear his strong belief that Sunderland was the right place for the new Micra to be built.

There had been suggestions the government might offer Nissan a £100m subsidy. According to the prime minister's spokesman, both sides are now discussing European Union grants for Sunderland worth about £50m.

Nissan is likely to make an announcement soon about the the new Micra, which is due to come out in 2003.

The company's plant in Sunderland has struggled in recent months because of the strength of the pound against the euro.

Nissan has said that it is considering building the new Micra at its Barcelona factory or a plant of its French partner Renault because of the UK Government's failure to set out a timetable for joining the euro.

Sterling warning

Last month, Mr Ghosn warned that the strong pound might force the company to switch production away from its Sunderland factory.

About 80% of the cars produced there are exported to mainland Europe and sterling's strength cuts into the profit made on many of these sales.

"We think there is a real threat that logically we could be brought to the conclusion that the best investment is not in Sunderland, but maybe somewhere on the (European) Continent," Mr Ghosn said.

The government's fear is that if Nissan moves production of the next generation Micra to France or Spain, about one thousand jobs could be lost in Sunderland.

The UK car industry has already had a tough year.

Rover nearly closed after BMW said it was to sell the loss-making company. It was eventually saved by the Phoenix consortium.

Ford recently announced that it would end car production at Dagenham by 2002, with the loss of several thousand jobs.