Nissan yesterday wielded a double-edged sword by agreeing to build its new small car in Britain rather than France - but forcing the nation's hard-pressed component suppliers to bear the brunt of the foreign exchange risks.
The decision has sparked a political row, with anti-Europeans claiming that the prime minister had given Nissan's president, Carlos Ghosn, assurances about when Britain would join the euro. This was denied by the prime minister's spokesman and by Whitehall sources, who said no deal had been done.
Mr Ghosn - known as "le cost killer" - ended months of speculation by saying that Nissan would invest £235m to make the next-generation Micra at the group's Sunderland plant, rather than at a Renault factory near Paris.
He added that the Sunderland unit, which makes the current Micra, Almera and Primera models, would increase its capacity from 350,000 to 500,000 cars a year, creating 500 new jobs.
Nissan's long-awaited decision will secure the future of the Sunderland plant, which employs about 5,000 people. About 1,300 jobs would have been lost if Micra production had moved to France.
Mr Ghosn said that the Sunderland plant had committed itself to reducing costs by 30% to offset the impact of the strong pound. It aimed to neutralise the currency risk by purchasing components in the same currencies in which it sold vehicles.
This meant that the amount of Micra components billed in euros would rise from 35% to "more than 65%". He added that it would be up to the component suppliers to decide whether to manufacture in Britain or in the euro zone.
Paul Everett, head of policy and economics at the Society of Motor Manufacturers and Traders, said Nissan, like other British-based car groups, was "pushing the pain down the supply chain" to overcome the disadvantages of being outside the euro zone.
"What's good news for Sunderland is not that good news elsewhere," he said, urging ministers to reassure component suppliers.
"They need a stable, competitive exchange rate and there's a growing view among them that that is not going to be delivered, certainly not until the government gives a clear timetable for entry to the euro."
Mr Ghosn said last September that the Micra would only be built in Britain if the euro was stable against the pound. Yesterday he said that a "stable and competitive" pound was essential, but refused to say whether British ministers had indicated that they would take the country into the euro.
He said that Britain's position on the euro had been "very important for us in coming to this decision".
Stephen Byers, the trade and industry secretary - who was alongside Mr Ghosn when he made the Micra announcement - reiterated the government position. "In principle, we can see the benefits of joining a successful euro currency, but the conditions have to be right. It will be considered in the next parliament," he said.
But Conservative leader William Hague said: "If [Nissan] have received any assurances about joining the euro from the current administration, we would be interested to know what they are."
