BRUSSELS, Sept 22 (Reuters) - The British government won European Commission approval on Wednesday to grant 14.4 million pounds ($25.8 million) of aid to a British car plant owned by France'sPeugeot Citroen .
The grant will help upgrade Peugeot's Ryton plant, in the West Midlands, so it can produce the successor to Peugeot's 206 small car, a European Commission spokesman said.
The Ryton plant produces the current 206. The plant will be upgraded between 2005 and 2010 at a total cost of some 147 million pounds, the Commission said.
Under European Union rules, most government aid to private business is banned to promote a level playing field in competition across Europe. But aid is permitted in some cases, such as in economically distressed areas.