Autumn has seen a marked fall in sentiment amongst UK service providers, according to the latest KPMG Business Outlook Survey.

Although remaining positive overall, the overall degrees of confidence with regard to prospects for activity, revenues, new orders, profits, employment and capital spending were all well down and below those recorded through 2006.

Just over 50 per cent of respondents expect activity to be higher than current levels in 12 months' time, but with an increased proportion anticipating a decline - 15 per cent compared to 10 per cent in the spring.

The resulting net balance of 35.6 was well down on the previous survey's 48.5.

KPMG said it followed the recent financial market turmoil and the ensuing Northern Rock crisis.

Whilst the majority of firms anticipate growth of revenues and new business over the coming 12 months, the respective net balances of 34.4 and 33.1 were well down on previous levels.

And UK service providers lowered their expectations for profits growth over the coming year.

While a net balance of 23.7 suggested that profitability will continue to improve, a fall from 38.3 in the spring implies a marked downshift in the rate of growth.

Mel Egglenton, senior partner of KPMG in Birmingham, said: "This is the most pessimistic survey yet, reflecting the uncertain economic outlook, strong sterling and record oil prices.

"The UK service sector, the driving force behind the economy, is set to drop down a gear in 2008, suggesting slower overall UK growth ahead."