According to a survey by the Chartered Institute of Purchasing and Supply (CIPS), the service sector activity index fell to 52.1 in October - down from 54 the month before.

The service sector employs everything from waiters to financial analysts

It is the weakest growth figure ever recorded by the survey, which was first published two years ago.

A figure of 50 denotes no growth, numbers above indicate growth, while figures below show a contraction of the industry.

Prices falling

Another sign of weakness in the service sector is a fall in prices.

The seasonally-adjusted Average Prices Charged Index stood at 48.5 in October, down from 51 in September.

James Stewart, economist with Weavering Capital, called the figures "particularly weak", and predicted that they would increase the pressure on the Bank of England to announce a cut in interest rates on Thursday.

He said the numbers would raise "a serious question of whether a 50 basis point (0.5%) cut is really enough."

Since last month's rate cut of 0.25%, business leaders and trade unions have called on the UK's central bank to reduce interest rates by at least half a percent, if not a full percentage point.

The bank's interest rate currently stands at 7.25%.

On Monday the CIPS reported a dramatic slowdown in the UK's manufacturing service, confirming the results of similar surveys produced by the Confederation of British Industry and the the British Chambers of Commerce.

Confidence

However, the anecdotal evidence of such surveys tends to be gloomier than real economic life.

Recent official data showed the UK economy as being much stronger than had previously been thought.

This seemed to be somewhat confirmed by the CIPS survey.

Overall business confidence appears to be optimistic.

The Business Expectations Index for the service industry stands at 65.6, up nearly two points from September.

It shows that a large number of companies believe that their business prospects are about to improve.

The CIPS survey of the service industry is based on questionnaires sent to purchasing and business executives in 500 private sector companies.