Artists like Sam Smith, Ed Sheeran and Paloma Faith helped the British music industry contribute £4.1bn to the UK economy in 2014.
Overall, the market grew by 5%, outpacing the British economy, which grew 2.6% in the same period.
The increase can be traced to revenues by musicians, composers and lyricists, which rose 11% to £1.9bn and live music sales, which jumped 17% to £924m.
The figures were published by trade body UK Music.
British artists accounted for one in seven albums sold around the world in 2014, with One Direction, Ed Sheeran, Coldplay, Pink Floyd and Sam Smith all making the top 10 list of the year’s best-selling albums.
It means that Britain is now the second-largest provider of recorded music in the world, accounting for 13.7% of global sales.