British small manufacturers are enjoying the fastest growth in export orders in more than a decade but are suffering from a dearth of demand at home, the Confederation of British Industry said yesterday.

Britain’s economy barely grew in the first three months of this year, according to official data, and economists are keeping a keen eye out for signs of a pick-up.

The CBI said its quarterly poll of small and medium-sized manufacturers showed the biggest rise in export orders since the survey began. But domestic demand was flat, and businesses are worried exports could falter too.

“Cost pressures remain high, and investment plans have deteriorated,” CBI economist Alpesh Paleja said.

Plans to invest in plant and machinery fell particularly sharply, despite businesses reporting that it was a lack of capacity in this area of their operations was more likely to hamper expansion plans than at any point since 1988.

Overall, the CBI expects economic growth this year will be “tepid” and similar to last year.

Britain is due to leave the European Union in March 2019 but terms of its departure and long-term trade relationship with its biggest trade partner have not been finalised.

“Building on recent progress in agreeing a transition period, other hurdles on the Brexit path need to be cleared swiftly and in the same spirit of compromise,” CBI said.