smallbusiness.co.uk: Helping your business think big

Businesses in the service sector are suffering under the pressures of the credit crunch, according to the Confederation of British Industry (CBI).

Research by the organisation found that the profitability of the sector has fallen sharply in customer-facing organisations.

A reduced number of businesses questioned in the CBI Services Sector survey said they were planning to expand in the coming year and many were concerned about whether they could raise outside finance.

The biggest reduction in the amount of business being carried out and the value of business transactions was seen among hotels, bars and restaurants which saw reductions at their fastest level since the period immediately following 9/11.

Professional services firms such as lawyers, accountants and recruitment firms, saw their businesses grow in terms of the number of transactions and the value of those taking place, despite selling prices falling.

Last week the CBI called on the government to consult business before making tax changes which might affect firms' profitability or competitiveness.