General business optimism in Northern Ireland has increased rapidly since the spring, in stark contrast to the trend of falling business confidence in every other region of the UK, the Confederation of British Industry (CBI) says in its latest Regional Trends survey.

The CBI believes the increase in Northern Ireland business confidence "possibly reflects the historic peace process currently under way". "Manufacturers in the region have remained confident despite a slight contraction in orders."

Total orders are expected to remain unchanged over the next four months. However, export orders have continued to decline for the sixth consecutive survey, reflecting the damaging effects of the strong pound on overseas trade. A sharp contraction in export orders is expected over the coming four months.

The gloomy CBI survey findings contributed to the City's gathering fears of a new British economic recession, possibly coupled with continuing inflation.

Manufacturers' orders declined in every UK region in the April/July period and are expected to continue to fall in the current August-November months.

Mr Sudhir Junankar, CBI associate director of economic analysis, said the picture for manufacturing was "tough across the entire country".