Fewer people are setting up their own businesses, with start-ups at their lowest level since 1992.

Research by Barclays showed there were 83,570 new businesses in England and Wales during the second quarter of 2001, a 16% fall from the same quarter last year.

The biggest falls were in East Anglia, Wales and south west England, as potential entrepreneurs dealt with what Barclays described as the "double whammy of difficulties in the farming industry and reduced tourist numbers".

But Yorkshire and the West Midlands bucked the trend to report 11% and 4% rises respectively.

While the number of start-ups fell, the number of businesses closing during the quarter also dropped, by 3% against the same period last year.

Two-speed economy

Meanwhile, there were more signs that the recession-hit manufacturing sector was falling further behind the services sector.

Pay settlements in manufacturing have stayed unchanged in the past quarter at 2.9% while the services sector jumped to an average 4.6% from 3.9%.

"Clearly it's a tale of a two-speed economy. Manufacturing settlements are relatively low and reflect major downward pressure on prices, coupled with the impact of the global slowdown," said Sudhir Junankar, the CBI's head of economic analysis.

The CBI said the rise in service sector pay levels had been affected by a batch of high awards in May among professional services firms with a small numbers of employees.

A year ago pay rises averaged 3.1% in manufacturing settlements and 3.8% in the services sector.