Business optimism in Britain is at its highest point in over a year, according to a new survey released on Monday.

The Markit Business Outlook Survey of British business mood showed that improved domestic economic conditions and a growth in export markets had been key factors in the increase in optimism.

Among European Union (EU) nations, Britain's firms are the most optimistic about business prospects over the next 12 months.

The net balance of companies forecasting a rise in business activity over the coming year stands at plus 46 percent, up from plus 41 percent late last year, and is the joint-highest seen over the past two years, with manufacturing hitting a new two-year high.

Manufacturers in Britain are the most optimistic about activity growth of all developed countries covered by the global outlook survey.

However the prospect of higher input cost inflation means that British firms report they are more likely than firms in any other developed economy to raise their prices.

One of the reasons that input costs are rising is that the pound is falling, having dropped 7 percent in value against the dollar since the beginning of the year. This has driven up raw material costs for manufacturers.

Xinhua spoke to Andrew Harker, senior economist at Markit, who said, "A lot of the optimism among businesses in the survey is reflecting the weakness of the pound, which is an export benefit for many companies."

"However, this is a double-edged sword," said Harker. "Some manufacturers import from abroad and they see a weaker pound as a threat."

But a weakening pound was not the only factor behind renewed optimism, said Harker.

"There is an improved international environment; business outlook has approved across many developed and developing markets and that has led to improved sentiment in Britain as well. If lots of other countries have improved conditions that will help the British economy too."

Confidence has improved, said Harker, but it is still well below where it was several years ago.

"There is still a lot of uncertainty around, and companies are not completely optimistic. There are still lots of things to be wary about," said Harker, who added that it was wise not to get too excited about the figures.

"What we have seen over the past few years, broadly, is stagnation in the British economy," he said.

Employers also reported that they were more optimistic about creating new jobs, and in the manufacturing sector there was a much improved sentiment about investment, a sign that there was likely to be a pick-up in both areas, but improvement was likely to be modest, said Harker.