The European Commission has pared back regional aid earmarked by the Spanish government to invest in Ford España’s Almusafes (Valencia) plant, ruling that Madrid should spend only Euro 11.11 million, rather than the Euro 15.74 million originally planned.

The money will help the plant produce a new engine, the I4, that will power cars like the Focus and the Mondeo from 2003 onwards.

Investments amounting to Euro 334 million will be sunk into the plant between 2000 and 2003.

Brussels ruled that the package exceeded public subsidy limits allowed under EU state aid rules, which are designed to create a level playing-field in Europe regarding government subsidies.