Its latest quarterly SME survey found that in addition to demand flattening after nine months of growth, firms were now becoming more pessimistic about their future prospects.

A CBI spokesman said:

"However, looking ahead, businesses are less optimistic and overall demand is forecast to weaken, so it is vital that the Government supports this sector.

"The recent changes announced on Capital Gains Tax have dealt a hammer blow to many investment plans, adding further pressure to the SME sector."