HONDA says it will not expand the capacity of its Swindon factory due to uncertainty over Britain's refusal to join the euro.

But Takeo Fukui, president of the Japanese car giant, has said his company has no plans to shut the plant.

When asked about Honda's investment in Swindon, Mr Fukui told the Financial Times: "We made a mistake. We thought the UK was in Europe but its reluctance to join the euro is a big problem."

And he added that once the Swindon plant is up to capacity Honda would only expand if Britain joined the euro.

He said: "Our intention is to bring operations at Swindon to full capacity and have no plans to expand, though we may change our minds if Britain were to join the euro."

Mr Fukui also said that the firm would look to use its newer factory in Turkey to increase its competitiveness in Europe.

The comments coming out of Japan come just weeks after Honda announced it is looking to recruit and additional 100 workers in Swindon to take its workforce past the 5,000 mark.

The recruitment drive was launched after the company admitted it was struggling to keep up with demand for the 4x4 CR-V and the Civic.