Manufacturers remain cautious about British entry to the European single currency, according to the latest survey.

The poll of 500 firms for the Engineering Employers' Federation also found support rising for both the pro and anti-euro campaigns.

Of those questioned, 55 per cent either supported a "wait and see approach", or were in favour of British entry to the eurozone without a rigid timetable.

A similar proportion also believed it "likely" that the UK would have joined by 2005, with a further 16 per cent considering it "very likely".

Given a longer timescale, 61 per cent believed it "very likely" that the pound would be scrapped by 2010, with a further quarter believing it to be "likely."

Support would rise, bosses said, if the exchange rate was more competitive - a view shared by accountants Deloitte and Touche, whose survey estimated that the pound would need to fall against the euro by a fifth to assist UK exporters.

Those respondents wanting an immediate decision on the issue rose from 35 to 45 per cent.

Nearly a third of employers wanted the UK to join the euro either now or by 2005, compared to just over a fifth in January.

The number of firms seeking a decision not to join, within this parliament or ever, rose from 14 per cent at the last survey to 16 per cent.

"Our survey shows that whilst manufacturers are becoming more internationalised and more exposed to the euro, the majority of them still remain undecided on the issue," said Martin Temple, director general of the Engineering Employers Federation.

"Apart from a more competitive exchange rate, what manufacturers need most is to see their largest market - the EU - perform more strongly."

Campaigners for the euro welcomed the results.

"British business is warming to the euro as it becomes clear that isolation from the euro is undermining British trade, damaging inward investment, and hurting British exporters," said a Britain in Europe spokesman.

"With supporters of the euro outnumbering opponents by three to one, this survey confirms that joining the euro would be in the interests of British business."

Campaign group Business for Sterling claimed that experience of the euro on the continent had dampened enthusiasm for the currency in the UK.

"Engineering firms are split and there is very little enthusiasm for entry in this parliament," a spokesman said.

"Engineering firms can see the problems the euro is causing in Germany and realise we are better off keeping control."