WEAKNESS has intensified among consumer services firms with

business volumes, profitability and expansion expectations all deteriorating markedly, according to a survey published today by the CBI and Grant Thornton.

The quarterly Service Sector Survey was conducted after the war in Iraq and findings indicate that the weakness in many areas is entrenched and due to more than just international uncertainty. Any recovery will be protracted and hard-fought.

Consumer services firms - such as hotels and restaurants - reported the fastest decline in business volumes for a year. The balance of minus 22 per cent matches the figure recorded in May 2002.

Adrian Smith, regional corporate finance partner at Grant Thornton's Southampton office, said: "The service sector is not all doom and gloom but there is no denying that within it, consumer services firms are struggling.

"Their business value, volume and profitability levels have been in freefall over the past two years, making these firms increasingly desperate for a boost.

"The 'Baghdad bounce' many commentators were predicting, following the successful end to the Iraq conflict, simply hasn't materialised."