Recovery in services sector slows in June

Heightening such concerns, the new business index fell to 49.7 in June from 51.8 in May -- the first decline in the index since November.

"It is somewhat concerning that new business has come off but it's a lot better than a few months ago," said Amit Kara, an economist at UBS.

In a bid to support sales, average output prices were cut for an eighth consecutive month in June. In contrast, average input prices picked up slightly on the back of higher fuel costs.

Despite the fall in new business and further job losses, business confidence continued to rise in June with the expectations index hitting its highest level in almost two years.

Separate data from the Bank showed Britons injected more than 8 billion pounds of equity into their homes in the first three months of the year.

Britons have injected equity into their homes now for four consecutive quarters, reversing the trend of equity withdrawal to fund other spending that has dominated the past decade.

With consumers no longer using their homes as cash machines, analysts are concerned that consumption will suffer as a key source of funding is turned off.

"Consumer spending was weak in the first quarter of the year and it remains to be seen whether negative equity withdrawal will continue if the housing market stabilises later this year," said Philip Shaw, chief economist at Investec.

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