NISSAN could be forced to decide where to build its new Micra before hearing the outcome of an investigation into a £40m package of state aid, the European Commission (EC) has revealed.

The EC warned it was unlikely to rule on the proposed aid for the Sunderland plant before the Nissan's executive board meet next month.

It is believed a decision will be made at the meeting on whether to build the Micra at Sunderland, or at the Renault factory in Flins, France.

But, although the item is on the agenda for discussion, Nissan's corporate affairs manager Andrew Horne refused to confirm if that would be decision day for the Micra.

The European Commission's official journal also predicted heavy job losses at the North-East plant if Nissan decides the Micra assembly goes to Flins.

The journal stated: "Without the project, capacity utilisation in Sunderland would be reduced by 220,000 units with the resultant loss of some 1,300 jobs at the plant, and significant job losses among local suppliers."

A cost benefit analysis carried out by the British Government also suggested it would cost £79.2m more to assemble the new Micra in Sunderland.

The DTI confirmed that Secretary of State Stephen Byers was being kept fully informed of the EU investigation.

A spokesman said: "We are in close contact with the EU on this issue, and we are making sure they have all the information they need to make a decision.

"We have been encouraged with the speed of discussions they have so far instigated, and the Secretary of State appreciates there are a lot of jobs involved at the Nissan plant."