Twenty-one per cent of respondents said volume of business was up over the last three months but 31 per cent said it was down.
Commenting on the survey, John Hitchins, UK banking leader 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. More jobs are likely to be lost in 2003 as firms grapple with their cost bases in the face of uncertain income prospects."
The respondents were less negative about the next three months but still expect business volumes to fall, according to the survey. The level of business, both at home and overseas, has fallen further below normal. Despite a modest economic pick-up and a period of stabilisation in world equity markets, business optimism has deteriorated over the past three months.
The decline in the volume of business is not large, but for the industry as a whole, it is the steepest since December 1992. However the overall decline masks stark differences between individual sectors within the financial services. General insurers reported the biggest growth in business volumes with every respondent seeing an increase. Finance houses also experienced a significant rate of growth. By contrast, substantial declines were experienced by fund managers, life insurers, insurance brokers and stockbrokers.
Ian McCafferty, CBI chief economist, said: "2002 was a difficult year for many parts of the financial services industry especially those affected by the performance of the stock market. Across the sector as a whole, the sharp rebound reported in the April to June quarter prompted hopes that the industry would return to its more normal pattern of continuous expansion. But subsequent surveys, including this latest snapshot, show that difficult conditions remain."
