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Agreement to make new Qashqai and X-Trail SUVs in North East made in 2016 It was heralded as the flagship post-Brexit agreement between the Government and the car industry

But bosses at Japanese carmaker Nissan are set to renege on their promise to build a new car model in the North East, in a major blow to the Prime Minister's Brexit plans

The agreement to make new Qashqai and X-Trail SUVs in Sunderland was made just months after the referendum in 2016 and was hailed by Theresa May as 'fantastic news'

She added at the time: 'This vote of confidence shows that Britain is open for business and that we remain an outward-looking, world-leading nation

' Today those comments will ring hollow to 7,000 Sunderland workers, with Nissan set to scrap plans to build the X-Trail there

Precise details are expected to be made tomorrow, according to Sky News, and will prompt questions over the car giant's future commitment to the UK

Last night, Bridget Phillipson, Labour MP for Houghton and Sunderland South, said: 'If confirmed, this would be deeply troubling news for the North East economy

'So many jobs depend on Nissan and the Brexit uncertainty has done huge harm to the automotive sector

' The decision comes just weeks after Jaguar Land Rover and Ford both said they will axe nearly 5,000 jobs over fears of a No Deal Brexit

Manufacturers are warning Ministers that leaving the EU without a deal could destroy the industry

World Trade Organisation tariffs for car exports to the Continent are at ten per cent

The secretive deal with Nissan was struck in 2016, with Ministers refusing to reveal details beyond insisting it did not involve financial incentives for the company

However, it was made with the company's former chairman Carlos Ghosn, who is holed up in a Japanese prison cell

The shamed ex-CEO is facing allegations of tax evasion and financial irregularities, with current bosses turning their backs on him

Scrapping the X-Trail plans is not expected to have a major impact on current staff at the plant, but it is likely to mean the creation of several hundred new jobs will now be on hold

The Nissan factory already produces the electric Leaf car, and other models including the Juke and QX30, with 440,000 vehicles rolling off production lines

The X-Trail is currently made only for the Japanese market, but, without a free trade agreement between Britain and the EU, any plans Nissan may have to ship the X-Trail to Europe could be binned

Last night, the Unite union's assistant general secretary Steve Turner said: 'We will be meeting with the company on Monday morning

Our priority is to ensure investment commitments are upheld.' The car industry has been struggling in recent months, especially as diesel vehicles fall out of favour with drivers

But more concerning is that investment has collapsed in the past 12 months in the UK, according to the Society of Motor Manufacturers and Traders

Mike Hawes, SMMT chief executive, said: 'With fewer than 60 days before we leave the EU and the risk of crashing out without a deal looking increasingly real, UK Automotive is on red alert

' In January, Jaguar Land Rover said it would cut 4,500 jobs in the UK, mostly management positions, and Ford said 400 jobs would go from its Bridgend engine plant

Airplane and engine maker Airbus has also warned it could withdraw from the UK in the event of a hard Brexit

For more infomation >> Nissan breaks its promise to produce its new X-Trail SUV in post-Brexit Britain - Duration: 6:08.

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Nissan cancels plans to make X-Trail SUV in the UK amid Brexit chaos - Duration: 5:02.

Nissan said it will consolidate production of the next Generation X-Trail at its plant in Kyushu, Japan, where the model is currently produced, allowing the company to reduce investment costs in the early stages of the project

That reverses a decision in late 2016 to build the SUV at Nissan's Sunderland plant in northern England, which employs 7,000 workers

That plant will continue to make Nissan's Juke and Qashqai models. The announcement Sunday made no mention of any lay-offs relating to the X-Trail SUV decision

"While we have taken this decision for business reasons, the continued uncertainty around the UK's future relationship with the EU is not helping companies like ours to plan for the future," Nissan Europe Chairman Gianluca de Ficchy said in a statement

Less than two months before Britain is scheduled to leave the European Union on March 29, Britain still doesn't have an agreement on what will replace 45 years of frictionless trade

This has caused an enormous amount of concern among businesses in Britain, which fear the country is going to crash out of the vast EU trade bloc without a divorce deal, a scenario economists predict would hurt the U

K. economy. The Nissan decision, first reported by Sky News, is a major setback for May's Conservative government, which had pointed to Nissan's 2016 announcement that Sunderland would make the SUV — months after the country's Brexit referendum — as proof that major manufacturers still had confidence in Britain's economic future

Nissan's announced its plans to build the X-Trail and Qashqai models in Sunderland after the government sent a letter to company officials offering undisclosed reassurances about its ability to compete in the future

British politicians have sharply criticised May's Brexit deal and voted it down in parliament

May's government has refused to rule out a no-deal Brexit, saying the threat strengthens her hand with EU negotiators

Parliament voted last week to give May more time to try to iron out a compromise with the bloc

Nissan's change of heart comes just days after Britain's carmakers issued a stark assessment about Brexit's impact on the industry, warning that their exports are at risk if the U

K. leaves the EU without an agreement. Investment in the industry fell 46 per cent last year and new car production dropped 9

1 per cent to 1.52 million vehicles, in part because of concerns over Brexit, the Society of Motor Manufacturing said

The group's chief executive, Mike Hawes, described the threat of a no-deal Brexit as "catastrophic

" He says the drop in investment is only a foreshadowing of what could happen if the U

K. leaves the EU on March 29 without a deal. "With fewer than 60 days before we leave the EU and the risk of crashing out without a deal looking increasingly real, UK Automotive is on red alert," Hawes said Thursday

"Brexit uncertainty has already done enormous damage to output, investment and jobs

For more infomation >> Nissan cancels plans to make X-Trail SUV in the UK amid Brexit chaos - Duration: 5:02.

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Nissan confirms next-generation X-Trail SUV will be made in Japan instead of Sunderland - Duration: 11:16.

Agreement to make new Qashqai and X-Trail SUVs in North East made in 2016 Nissan has officially announced it next-generation X-Trail SUV will be made in Japan rather than Sunderland

The Japanese car giant had promised to build the new model in the North East after Brexit, in what was heralded as the flagship post-Brexit agreement between the Government and the car industry

In a major blow to the Prime Minister's Brexit plans, however, the carmaker confirmed in a letter to workers on Sunday that the model would be made elsewhere

Nissan chairman Gianluca de Ficchy said in the letter that much had changed since the Japanese firm announced plans to build a new Qashqai and X-Trail in the UK in October 2016

'At that time they were both planned as 'traditional' models, powered by internal combustion engines

X-Trail was already going to be made in Kyushu, but there was a good business case for bringing production to Europe as well

'Since that time, as you know, the environment for the car industry in Europe has changed dramatically

To meet the changing emissions regulations we've had to invest much more in new powertrains for our future models like X-Trail

At the same time, the volume forecasts for X-Trail in Europe have reduced.'For those reasons the company has decided to optimise our investments and concentrate production in Kyushu, instead of adding another production site

For the European business, this does not change the fact that X-Trail is - and will continue to be - a crucial model for us

'Today's announcement will be interpreted by a lot of people as a decision related to Brexit

We have taken this decision for the business reasons I've explained, but clearly the uncertainty around the UK's future relationship with the EU is not helping companies like ours to plan for the future

' The letter continued: 'With the UK's departure from the EU on March 29 getting closer every week, we have a taskforce in place, reporting to me, that is considering all of the possible scenarios and the potential impact on the business

'As a responsible business with 16,000 employees in the region, I want you to know that we are preparing across all functions, and with our supply chain, for anything that might impact our current business model

When the time comes to initiate any of those plans, we will be ready, and we will communicate with full transparency to all of you

' Nissan was still investing heavily in the new Juke model and the next-generation Qashqai, said Mr de Ficchy

'Since they were originally allocated, those two models have also needed a lot of additional investment to meet the new emissions regulations and to electrify their powertrains

'The team in the plant still has the full confidence of the company.' The agreement to make new Qashqai and X-Trail SUVs in Sunderland was made just months after the referendum in 2016 and was hailed by Theresa May as 'fantastic news'

She added at the time: 'This vote of confidence shows that Britain is open for business and that we remain an outward-looking, world-leading nation

' Today those comments will ring hollow to 7,000 Sunderland workers, with Nissan scrapping plans to build the X-Trail there

The news prompts questions over the car giant's future commitment to the UK after Brexit

On Friday, Bridget Phillipson, Labour MP for Houghton and Sunderland South, said: 'If confirmed, this would be deeply troubling news for the North East economy