Firms have hit “rock bottom” as a result of the economic lockdown and expect a slower fall in activity in the next few months, new research suggests.

The CBI said its study showed that private sector activity fell at its fastest pace on record in the three months to June, especially in consumer services.

Manufacturing output also continued to decline heavily, the survey of over 900 firms indicated.

A slower pace of decline is expected over the next quarter although businesses have concerns about being able to fully reopen, said the report.

Despite challenges, most businesses believe remaining operational under social distancing is feasible.

Issues raised include a lack of demand, staff absences due to school closures and transport difficulties.

Alpesh Paleja, CBI lead economist, said: “These figures show the full impact of coronavirus on the economy after three months of shutdown. However, there are signs that we’ve hit rock bottom, with firms expecting a slower fall in activity over the next three months.

“Clearly tackling the lack of customer and client demand will be critical to economic revival. Businesses have highlighted several ways in which the Government can support them further – extending grant support schemes, widening business rates relief and further deferral of VAT payments.

“Despite challenges, most businesses believe remaining operational under social distancing is feasible. We now need continued co-operation between Government, business and civil society to steer our economy towards a sustainable and long-lasting recovery.”