UK record labels grew at the fastest rate since the Britpop era last year, as artists including Ed Sheeran, Little Mix and Stormzy helped boost revenues through vinyl records and streaming services.

Record companies in the UK generated £839.4 million in sales in 2017, up 10.6% on the prior year, according to figures from the British Phonographic Industry (BPI)

The last time the industry achieved a similar level of growth was in 1995, when sales jumped 10.7% on the back of Britpop bands such as Oasis, Blur and Pulp.

Now, record companies are banking on the success of stars such as Sheeran, whose album Divide was the most popular record in all formats last year.

Brit Awards 2018 – Show – LondonEd Sheeran won the gong for global success at the Brit Awards show this year (PA)

Streaming was the fastest-growing sales category, with revenues rising by 41% year-on-year to £388.8 million.

Streaming, which includes subscription services, video streaming and ad-supported streaming, now makes up close to half (46%) of the industry’s total turnover.

Sales of physical records also rose in the year, a trend supported by the ongoing revival of vinyl records, with sales of the format jumping 24% year on year.

Geoff Taylor, BPI’s chief executive, said revenues had grown because labels had invested in new artists and updated their business models.

“We are likely to see a continuing rise in 2018, with increasing awareness among consumers about the benefits of music streaming, and new developments that are likely to encourage the uptake of subscriptions, such as the launch of YouTube’s premium music service and the growing popularity of smart speakers in the home,” he said.

The BPI warned, however, that the industry’s income still lags behind its 2001 peak, when revenues hit £1.2 billion.