...but factory optimism at 20-year high

OPTIMISM among manufacturers has surged to its highest level for more than two decades as the weak pound boosts exports, figures reveal.

The sharp fall in sterling since the Brexit vote has made goods produced in factories across the country cheaper for buyers all over the world.

A survey of 423 firms by the pro-Brussels CBI yesterday found 45 per cent of manufacturers now expect output to rise in the next three months, while just 10 per cent predict a fall. The gap means confidence among factory bosses is the highest since February 1995.

The report by the CBI, which has previously called for Britain to join the euro and warned Brexit would be a disaster for the economy, also found factory output is already at its highest level since July 2014, with export orders the strong- est since December 2013. Anna Leach, head of economic intelligence at the CBI, said: ‘It’s been a strong month for UK manufacturers, with production growing robustly and overseas demand on the up. The past fall in the pound seems finally to be helping lift demand for UK manufactured exports, which rose at one of the fastest paces in this survey’s history.

‘Manufacturers are positive about the quarter ahead, expecting output to grow at the fastest rate since February 1995.’ Paul Hollingsworth, UK economist at Capital Economics, said that while the fall in the pound is pushing up inflation, the manufacturing figures show ‘ it continues to have some beneficial impacts too’.

But the CBI said the ‘flipside’ of the fall in sterling for manufacturers was that prices of raw materials and other components factories ship in from overseas are rising.