uk economy facing  major risks  the uk manufacturing sector will continue to face  serious challenges  over the next two years  the british chamber of commerce (bcc) has said.  the group s quarterly survey of companies found exports had picked up in the last three months of 2004 to their best levels in eight years. the rise came despite exchange rates being cited as a major concern. however  the bcc found the whole uk economy still faced  major risks  and warned that growth is set to slow. it recently forecast economic growth will slow from more than 3% in 2004 to a little below 2.5% in both 2005 and 2006.  manufacturers  domestic sales growth fell back slightly in the quarter  the survey of 5 196 firms found. employment in manufacturing also fell and job expectations were at their lowest level for a year.   despite some positive news for the export sector  there are worrying signs for manufacturing   the bcc said.  these results reinforce our concern over the sector s persistent inability to sustain recovery.  the outlook for the service sector was  uncertain  despite an increase in exports and orders over the quarter  the bcc noted.  the bcc found confidence increased in the quarter across both the manufacturing and service sectors although overall it failed to reach the levels at the start of 2004. the reduced threat of interest rate increases had contributed to improved confidence  it said. the bank of england raised interest rates five times between november 2003 and august last year. but rates have been kept on hold since then amid signs of falling consumer confidence and a slowdown in output.  the pressure on costs and margins  the relentless increase in regulations  and the threat of higher taxes remain serious problems   bcc director general david frost said.  while consumer spending is set to decelerate significantly over the next 12-18 months  it is unlikely that investment and exports will rise sufficiently strongly to pick up the slack.