Demand for beauty treatments and holidays has been hit

Over the past three months sales across the leisure, personal care and travel sectors fell but professional services to businesses, such as law, fared well.

But firms across the sector were more cautious about their prospects for the next three months, the CBI added.

By contrast an Engineering Employers Federation (EEF) survey showed healthy growth in the manufacturing sector.

However, while the group said rising domestic and export orders had boosted sales it warned that recent market turmoil could hit growth in future.

Meanwhile, the CBI - which polled 144 companies for its survey - blamed a combination of rising rates, poor weather and rising household bills for the drop in consumer spending.

"Consumer services firms don't expect to expand their businesses in the coming year," CBI economic adviser Ian McAfferty warned.

"Costs are expected to continue growing at a rapid rate, with less scope for firms to raise prices, which will inevitably put profit margins under greater strain."