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Confidence among UK manufacturers is falling because of weak High Street spending and slow growth in the eurozone, a report has said.

Domestic orders were at their weakest level for two years, according to the report by manufacturers' organisation EEF based on a survey of 1,000 firms.

It said the UK car industry saw a sharp decline in the second quarter of 2005.

The report called on the Bank of England to cut UK interest rates if the slowdown continued over the summer.

The Bank's Monetary Policy Committee voted in May to keep the cost of borrowing on hold at 4.75% for the ninth month running.

'Double impact'

EEF said it was cutting its growth forecast for UK manufacturing to just 0.5% from 1.4%, and for engineering to 1.1% from 2.6%.

"Manufacturers could only escape the double impact of a reluctant consumer and a poor eurozone for so long and we are now beginning to see the effects," said EEF chief economist Steve Radley.

"Despite a positive picture in some industries, there has been a change in sentiment across the economy which will need addressing if growth begins to stutter."

EEF's report said the car industry's decline in the second quarter of 2005 was marked by the collapse of MG Rover, and transport equipment and metal products firms struggling to win orders.