Nissan gets £50m grant to stop it leaving UK

The Government plans to give £50 million of aid to the Japanese car firm Nissan in an attempt to stave off the threat of big job cuts at its plant in Sunderland.

The Government plans to give £50 million of aid to the Japanese car firm Nissan in an attempt to stave off the threat of big job cuts at its plant in Sunderland.

Tony Blair will today hold talks with Carlos Ghosn, the president of Nissan, at Downing Street. The meeting comes after the company warned that jobs were at risk because of the high pound.

The Sunderland plant, the most efficient car factory in Europe, could lose the job of producing Nissan's new Micra to France, which would threaten 1,000 of its 5,000 jobs.

Nissan has linked up with Renault, and France's position inside the single currency could make it a more attractive bet for future investment.

Ministers hope to counter the threat, and expand the Sunderland plant, by lining up grants worth £50 million from government funds aimed at renegerating run-down parts of Britain. The cash injection will be discussed today but may not be approved until Nissan makes a decision on its investment plans. The grants would also require the approval of the European Commission.

Downing Street described today's meeting as a "listening exercise" and part of Mr Blair's dialogue with the car industry. He has already met Ford bosses and the Society of Motor Manufacturers and Traders.

The threat to the Sunderland factory has highlighted the problems caused by sterling's strength against the single currency. Last night the MSF trade union warned more job losses were certain and urged the Bank of England's Monetary Policy Committee to cut interest rates at its meeting on Thursday. Roger Lyons, the union's general secretary, said: "Thousands of jobs in manufacturing are at risk from excessively high interest rates and the overvalued pound, which has risen by 30 per cent against other European currencies since the MPC took over control of interest rates."

Lord Haskins, chairman of the Northern Foods group, called on Mr Blair to show more leadership on the single currency. He said: "I think there has been in the last couple of years a tendency for the Government to react to events rather than lead events."

The Labour peer predicted a referendum on the single currency could be held as early as six months after the next general election if Mr Blair wins a healthy majority.

The Prime Minister will be accompanied at his meeting with Nissan by Stephen Byers, the Trade and Industry Secretary, who will today unveil plans to make the price of cars much cheaper in Britain.

Mr Byers is expected to promise legislation to allow dealers to import cheap cars from abroad without risking the loss of their franchises from the car makers. The move follows an inquiry by the Competition Commission earlier this year and could cut the price of a new car by up to 30 per cent.