Poor performance in the service industry has pushed the UK economy closer to recession, experts have warned.

The sector accounts for 80 per cent of the UK’s Gross Domestic Product (GDP) but Wednesday’s lower-than-expected results tipped the economy to levels that had ‘never been seen before in over 20 years of history’ – without financial stimulus such as rate cuts or quantitative easing.

The problems come on top of Monday’s manufacturing data suggesting its fastest drop in seven years and Tuesday’s construction sector figures that showed the sharpest new-orders fall since the financial crisis.

Uncertainty surrounding Brexit and its impact on investment plans, as well as increasingly competitive markets also contributed to the problem, it was said.

The results were published as part of the IHS Markit/ CIPS UK services PMI survey where anything below a 50 is seen by insiders as a sector in reverse.

The service industry scored 50.6 with growth projections now at their lowest since July 2016.

When these are combined with manufacturing and construction, the UK sits at 49.7 – translating into a potential 0.1 per cent shrinking in GDP in the third quarter of the year.

Chris Williamson, chief business economist at IHS Markit, said: ‘So far this year the services economy has reported its worst performance since 2008, with worrying weakness seen across sectors such as transport, financial services, hotels and restaurants, and business-to-business services.’

He added: ‘The August decline in the all-sector PMI has pushed the surveys further into territory that would normally be associated with looser monetary policy.

‘Such weak PMI readings have in fact never been seen before in over 20 years of history in the absence of either recent or imminent stimulus such as rate cuts or quantitative easing.’

The services data was lower than the 51 score analysts expected and fell from 51.4 in July.

The data also revealed: ‘New export work stalled, following a modest expansion in July.

‘A number of firms noted a boost to overseas sales from the weak sterling exchange rate, but there were also reports that some European clients had delayed committing to new projects in response to heightened political uncertainty.’

Analysts suggested the weak numbers could focus the minds of the Bank of England (BoE), which may want to cut interest rates in an attempt to stimulate spending.

Allan Monks at JP Morgan said: ‘The BoE has continued to push back on expectations it will cut rates.

‘While we have no doubt that this would happen in the event of a no-deal, the recent weakening in the data should start to alter the BoE’s thinking about the odds of a rate cut in other scenarios too – particularly in the event that the Article 50 deadline gets extended without a clear understanding of what happens next.’

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