Nissan president Carlos Ghosn has this morning announced that Sunderland will be home to the new Micra and in the process the Japanese firm will become the UK's largest car producer.

At 10 Downing Street today, alongside the Prime Minister, Mr Ghosn said the Sunderland decision was made on three factors.

He said: "First, our belief that the UK will again provide a place where we can build cars competitively. We believe it can offer us a favourable business environment with a competitive and stable exchange rate.

"Second, the £40m regional selective assistance, which swayed the balance, particularly in the short-term, towards Sunderland.

"Third, the convincing record of our Sunderland plant, where we have already invested £1.5 billion, in delivering on superior quality and productivity and committing to a 30% cost reduction through 2003."

With the new Micra, Sunderland will become one of the top volume facilities for Nissan in the world.

With projectd annual output of 500,000 units and a workforce of 5,000 employees, Nissan will also be the largest producer in this country.

Nissan is to invest £230m to building the replacement Micra from late 2002 and a further £500m to modernise the plant. It should secure the Sunderland complex for at least 10 years, and immediately safeguards 1,300 jobs.

Renault effectively controls Nissan, and Mr Ghosn had for months said the group was considering switching Micra to a plant in France.

This was seen by some analysts as a way of putting pressure on the EC to approve the £40m UK Government grant, which it did last week. Business leaders in the North-east insist the threat to the Sunderland plant was real.

There was speculation today that Trade and Industry Secretary Stephen Byers - who was in Tokyo recently - gave Mr Ghosn an assurance Britain would adopt the euro as soon as possible.

Nissan will want to buy more components from the eurozone which could threaten jobs at UK suppliers.

Toyota and Honda have both announced further investments in UK plants. Manufacturers with old car assembly plants are pulling out of Britain - Ford at Dagenham and Vauxhall at Luton end production next year. MG Rover insists the Birmingham Longbridge factory is safe.