Exports in Britain's manufacturing sector grew at the fastest pace in two years at the beginning of 2017, while the services industry staged a steady recovery, recording its strongest sales growth since the Brexit vote in June.

According to a survey released on Thursday (13 April) by the British Chamber of Commerce (BCC), manufacturers enjoyed the fastest domestic sales growth since the third quarter of 2015, while export sales grew at the quickest pace since the final quarter of the previous year.

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Most of the 7,300 firms polled were confident over their short-term future, with confidence at the highest since the first half of 2016, but the medium term outlook looked more uncertain amid fears of rising costs.

Britain's economy defied doom and gloom predictions and performed much better than expected following the Brexit referendum, largely thanks to the pound's decline and a recovery in the global economy.

However, while sterling's depreciation has boosted exports, it has driven inflation to a three-year high, squeezing households' budgets in the process. In turn, that is expected to weaken consumer spending, which has been the main driver of the UK economy over the last couple of years.

"Many firms tell us their short-term expectations are strong, but that the medium-term picture is far from clear," said Adam Marshall, the BCC's director-general. The BCC added rising inflation was "a key risk to the UK's growth prospects".

Rising prices were becoming increasingly concerning for consumers, according to a separate survey conducted by market research firm Nielsen after Theresa May formally triggered Article 50 late last month.

"Although immigration concerns have dropped, leavers are starting to worry more about everyday matters, particularly rising utility bills and food prices," said Steve Smith, Nielsen's managing director for the UK and Ireland.

Meanwhile, a survey released by the Federation of Small Businesses (FSB) showed business confidence rose to its highest since late 2015, but warned that the boost to exports coming from the weak pound will eventually peter out.

The industry body added over 25% of small businesses would be deterred from exporting goods to European Union countries, should they face any tariffs once Britain exits the 28-country bloc in two years.

"We cannot rely in the long term on the boost that exporters have received from a weak pound," said FSB chairman Mike Cherry.

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