The level of new business activity in the financial services industry fell over the past three months, according to the CBI's latest survey.

The quarterly survey by the CBI and PricewaterhouseCoopers found that despite a modest global economic revival, British business optimism fell in the three months to January. Business optimism was found to be at minus 16, the lowest fall since September 2001.

Almost a third (31%) of business reported a decline in the level of new business over the last three months. The survey found that business activity stood at minus 10 for the final quarter of 2002, compared with plus 43 in the second quarter of last year.

John Hitchins, UK banking head at PricewaterhouseCoopers said: "The industry ended 2002 in a worried frame of mind, reflecting growing concerns about a slowdown in personal sector business and specific fears on the state of the housing market."

Hitchins also warned that firms in the sector are likely to shed jobs as they battle against uncertain income prospects.

Ian McCafferty CBI chief economist said: "2002 was a difficult year for many parts of the financial services industry especially for those affected by the performance of the stock market."

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