GOVERNMENT aid to attract production of a new Nissan model to the North-East topped the agenda as company executives met Prime Minister Tony Blair yesterday.

The country's biggest car manufacturer was looking for assurances from the Government after revealing it is cutting costs at Sunderland, where 5,000 are employed.

The talks - described by No 10 as "constructive" - raised the thorny issue of the euro and its effect on Nissan's competitiveness in the global market.

Mr Blair made clear "the Government's strong belief" that Sunderland was the right place to build the next generation Micra.

The Micra currently accounts for a third of the 330,000 cars built each year on the site, and some 1,000 jobs could be lost if the new model were to be built elsewhere, with thousands more at stake in the region's supply industries.

Nissan is considering whether to build the new Micra in the North-East, at its Barcelona plant, or at factories operated by its French partner Renault.

Only last month, 400 jobs were lost at electrical wiring firm Sumitomo on Wearside - a major supplier to Nissan - with management blaming the strength of the pound against the euro.

Davey Hall, regional secretary of the AEEU engineering union, said: "The AEEU is very interested in the outcome of any negotiations between Mr Blair and Nissan.

"Any moves to assist in landing that production would be warmly welcomed by the AEEU."

Nissan plans to reduce spending on British components by more than £200m every year, ahead of an announcement later this year on the production schedules for the new generation Micra.

Yesterday, the Prime Minster and Trade Secretary Stephen Byers discussed the issue of Government aid for Nissan - believed to be about £50m - should it build the new Micra at Sunderland.

A spokesman for the Prime Minister would give no further details of any aid package, which would have to be carefully drawn up to avoid falling foul of EU competition laws.

Last month, Nissan president Carlos Ghosn stressed Nissan would not close the Sunderland plant, but warned currency problems could jeopardise a potential £150m expansion