FIRMS in Lancashire are facing increasing difficulties in selling their products overseas because of the strength of the pound.

And the problem is beginning to hit profits, according to the survey carried out by business information group Experian.

Businesses are increasingly concerned that pressures on inflation caused by building society windfalls will hit them even harder.

"Many of the major companies in the region depend heavily on exports," said spokesman Peter Brooker. "Their financial results indicate the difficulties they face in competing in export markets with the pound so strong.

"On the surface the economy appears to be healthy but there are strong signs that companies are finding it more difficult to compete in export markets and against cheaper imports."

And he warned that the prospect of further rises in interest rates was deterring companies from making the investment necessary to ensure future growth in the economy.

Some of the hardest hit sectors in the region include engineering, textiles, food manufacturing and pharm- aceuticals.

According to the survey the North West has suffered its first fall in profitability for 12 months.

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