Nissan is stressing that today's EU approval of a £40 million UK government aid package for Sunderland does not guarantee the plant will be the home of the new Micra.

The European Commission authorised regional investment of £40 million for the production of the new Micra at the Nissan plant in Sunderland, proclaiming in a statement that this was "good news for workers at the plant and for thousands in the supply chain and the local economy".

However, Nissan Motor (GB) rapidly quelled suggestions the availability of the money guaranteed UK production of the new car.

A company spokesman said: "It doesn't follow that we will build new Micra at Sunderland. Nissan's executive committee will meet in Tokyo and decide by the end of this month whether it will be built in the UK or at Flins, near Paris, France."

Production is due to start January 2003.

The UK government grant is conditional on Sunderland being the chosen site.

Making the announcement on grant aid approval, Mario Monti, EU competition commissioner, said: "The commission is now satisfied the proposed aid to Nissan is in line with the community rules for state aid and the specific rules for aid to the motor vehicle industry in particular."

The EU said Nissan had proved that Flins, the future home of the new Renault Clio and Twingo to be built on a common Nissan-Renault platform, is a "viable alternative" to Sunderland.

A cost analysis by the EU also found it would cost Nissan about a third more to produce the new Micra in the UK than in France.