British companies spent more on marketing in the second quarter than the previous quarter when budgets hit a near two-year low, but Brexit uncertainty continues to make firms cautious, a survey showed on Wednesday.

The IPA Bellwether report, conducted by IHS Markit, showed that 23 percent of marketingexecutives raised their budgets during the quarter, while just under 17 percent of executives who took part in the survey cut their marketing budgets.

The resulting net rise of 6.5 percent was higher than an increase of 5 in the previous quarter, the report said.

"Despite this overall positive growth, however, with continued Brexit uncertainty, the underlying story still remains one of caution, with the latest Bellwether data pointing to the second-slowestmarketing budget growth since Q1 2016," IPA's Director General Paul Bainsfair said.

Rising inflation - driven largely by the pound's fall since Britain's vote in 2016 to leave the European Union - has squeezed household incomes, causing broader economic growth to slow.

Around 300 UK marketing professionals, primarily from Britain's top 1,000 companies and across all key business sectors, were interviewed for the survey.

The report showed that Brexit remained a dominant theme for respondents, with a number concerned about the general uncertainty caused by the negotiations and how this might affect business and consumer confidence.

The panelists were most concerned about the dip in household spending, hurt by weaker confidence and fears over job security.

British workers' pay growth slowed to its weakest in six months despite record employment, the Office for National Statistics said on Tuesday.

The rise in marketing spend was supported by new product and service launches, overall business growth and increased optimism towards future opportunities, the report said, adding that increased competition had driven firms to boost marketing.

The survey also found that growth in advertising spending is expected to rise 1.1 percent in 2018, higher than a previous estimate of 0.8 percent. Expectations for a bounce back in Britain'ssecond-quarter GDP growth is leading to a greater degree of optimism towards ad spending.

(Reporting by Noor Zainab Hussain in Bengaluru. Editing by Jane Merriman)

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