The UK’s industrialists are increasingly looking overseas for business as they expect the rise in export orders to outpace improvements in demand at home, a report released on Wednesday showed.

In its latest quarterly Industrial Trends survey, the CBI said that manufacturers remained upbeat about demand over the next three months, with 14 per cent more respondents forecasting orders to rise than expected them to fall, the same as recorded in June.

But with modest optimism regarding domestic orders falling back a touch, albeit from the highest levels since the beginning of 2005, it is foreign markets that producers believe hold most promise.

The employers’ body said that a balance of 13 per cent of firms thought export orders would rise over the following three months, up sharply from a reading of 2 per cent at the time of the last quarterly survey in April.

Ian McCafferty, the CBI’s chief economic adviser, said: “The recent improvement in the fortunes of UK manufacturers has continued to be led by exports and the strength of global demand. If the expectations of UK firms for the near term are met, growth in export orders will rise further, to the fastest rate in a decade.”

The optimism regarding exports reflects a period of synchronised global growth, a booming Chinese economy and a sharp improvement in the performance of the eurozone.

However, Mr McCafferty expressed concern that with the current pace of global growth unlikely to last through 2007, there were worries about the longer term health of the manufacturing sector.

The CBI’s respondents’ optimism on exports supports the view contained in a report released on Monday by the Ernst & Young Item Club. The consultancy predicts that after allowing for VAT fraud, UK exports will grow by 9 per cent this year.

However, Professor Peter Spencer, author of the report, warned that with the consumer and government sectors over-borrowed, “this leaves medium-term economic growth critically dependent on exports and investment.”

Evidence that the consumer was indeed beginning to wilt was provided by figures released on Wednesday by Footfall, the retail information group. It said the number of people venturing on to the High Street fell for the second week in a row as the heatwave deterred shoppers. For the week ending July 23 the number of shoppers fell by 5 per cent compared with the same week a year ago.

Natasha Burton, spokesperson for Foot Fall said: “The ongoing hot weather spell continues to impact the number of people out shopping during the week. For example, Wednesday July 19 – which proved to be the hottest July day since records began – saw footfall down 7.3% compared with a year earlier. Even the sudden outbreak of storms and the start of some high profile sales this weekend failed to lift numbers.”

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