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Nissan is cutting 1,200 jobs at its Sunderland site as it slashes production in the face of declining sales.

Carmakers have been struggling in the economic downturn as consumers are unable to get credit for new cars, and have appealed to the government for help.

The cuts represent around a quarter of the plant's 4,900 workers, and include 400 temporary staff.

Nissan senior vice president for manufacturing Europe, Trevor Mann, said: "Like all manufacturers, Sunderland plant is currently operating in extraordinary circumstances not of our making.

"It is essential we take the right action now to ensure we are in a strong and viable position once business conditions return to normal."

Unite's joint general secretary, Derek Simpson said: "This is devastating news for the workers and their families. Today's announcement shows just how serious Britain's economic difficulties are."

If these worker's skills are lost, Britain will emerge from the recession considerably weaker, the trade union warned.

The extent of the industry's problems was highlighted in recent figures for new car sales, which fell 21.2 per cent in December and 11.3 per cent over the year.

Car manufacturers are lobbying the government for cash and for a reduction in car tax.