A TRADE war between the EU and America could erupt after the go-ahead was finally given for a 555-seat superjumbo plane that will create 22,000 new jobs in the UK.

The announcement of production of the plane by French group Airbus Industrie, in which UK company BAE Systems has a 20 per cent stake, will bring in £20bn worth of exports for the UK over the next 20 years.

Among those expected to benefit is Celtic Aerspace Ventures, formerly AS&T of Consett in County Durham. The company, which employs 250, was taken over by new owners last week, and a major part of its work is constructing wing components for BAE.

But a Government £530m repayable loan for the £8bn superjumbo project has angered US President Bill Clinton.

The US believe the loan violates global trade rules, a claim rejected by Professor Philip Lawrence, director of the aerospace research centre at the University of the West of England in Bristol.

He said: ''The Airbus A3XX government loans from the UK and Germany certainly do not breach this agreement, so the Americans have no case."

Airbus has already had a good response to the A3XX from world airlines which have already placed 50 firm orders including six from Sir Richard Branson's Virgin Atlantic.