Nissan fuels euro debate

Expansion at the Sunderland plant coud be jeopardised

Car maker Nissan has fuelled the debate over Britain's position in Europe, warning that the strength of sterling against the euro is threatening its future investment.

Nissan boss Carlos Ghosn told the Financial Times the company could limit production at its huge Sunderland plant, instead increasing output at other European factories.

We cannot make a decision until we have some guarantees we can count on for the future

Nissan's Carlos Ghosn

The warning puts further pressure on Prime Minister Tony Blair to back the European single currency.

He is currently in Germany to assert Britain's role as a central player in Europe, while discouraging moves towards "two-speed" political integration.

Mr Blair is expected to touch on the future of the EU - as well as worldwide commerce - on Friday during a speech at a conference organised by controversial theologian Hans Kung.

Expansion threatened

With production at Ford's plant in Dagenham, east London, set to end by 2002 and BMW's break-up of the Rover Group, the government is anxious to support Britain's dented car industry.

Mr Ghosn said the strength of sterling could jeopardise a potential £150m expansion.

The plant - Europe's most productive - employs 5,000 people directly and thousands more in the supply industry.

The Sunderland plant employs 5,000 workers

Mr Ghosn said Nissan had no intention of closing the plant - which produces the Micra car - but would decide by the end of the year whether to build its next generation of Micras there.

"The logical place for Micra is Sunderland, but we cannot make a decision until we have some guarantees we can count on for the future," Ghosn said.

He said he would hold meetings with the government "at the highest level" in the coming days.

Industry experts said Nissan could switch production of the Micra to the firm's Barcelona plant or factories operated by Renault, the French carmaker, which owns 36.8% of the group.

Rival firms - including Vauxhall, BMW, Honda and Toyota - have raised similar concerns about Britain's position outside the euro.

'Full players'

On Thursday Mr Blair told German Chancellor Gerhard Schroeder that Britain wanted to be part of a single European currency in principle, but that economic conditions had to be met.

We should be full players in Europe

Tony Blair

French President Jacques Chirac had earlier told the German parliament he wanted their two countries to lead a vanguard of nations towards deeper political union.

His backing for a "two-tier" Europe threw the pressure back on Mr Blair to assert his role as an influential player in the EU's development.

Mr Blair said before the meeting: "Being part of the European Union is good for Britain, it is good for British jobs, it is good for British people. We should be full players in Europe."

A spokesman for Mr Blair said issues raised included the enlargement and reform of the EU, the forthcoming French presidency, moves towards a more flexible Europe, Russia, the Middle East and China.

President Chirac tells the Bundestag of his vision

Conservative leader William Hague said the talks showed that Mr Blair was in a panic - he had lost control of events and was being "outmanoeuvred by France and Germany".

Mr Hague said the federalists in Europe had set out their agenda and the Conservatives had laid out their plans.

In contrast to Mr Blair's upbeat message over Europe, an opinion poll has signalled a hardening in British voter opposition to the euro.

A Mori poll carried out for The Times suggested Britons would vote by a 71% to 29% margin against joining the single currency.

This compared with a 60-40 margin nearly two years ago, and underlines that Europe remains a precarious electoral issue for the Labour government.