Despite recent "glimmers of encouragement" for the property industry the gloomy outlook for the financial services sector provide little cause for optimism.

The warning came in the latest quarterly survey by the CBI and PricewaterhouseCoopers.

John Forbes, PwC real estate industry leader for Europe, Middle-East and Africa, said: "Although there are some more "glimmers of encouragement" in the PwC / CBI survey for the real estate industry, there is little to be cheerful about in this.

"There is nothing to suggest a rapid return of liquidity and the news regarding the financial services sector as tenants, particularly in London is gloomy.

"The sector is expecting further reductions in profitability, employment and expenditure on property.

"It is also worrying for the longer term that, overall, financial services firms were slightly less optimistic about the competitiveness of the UK as a financial centre than in March."

The report found that many parts of the UK’s financial services sector expect business volumes to rise in the next quarter after 21 months of falls, while optimism about the overall business situation has risen for the first time in two years.

However, banking remains under pressure.

Although the three months to June saw levels of business, income and profitability continue to fall, this was at a much slower pace than earlier this year.

This suggests the industry may now be on a gradual path towards recovery, though differences between the sectors remain.

Insurance companies are the most optimistic about growth in business over the coming quarter, while banks also expect volumes to rise.

Building societies have experienced extremely tough business conditions since early 2008, but are now hopeful that volumes, income and profitability will stabilise in the next quarter.

By contrast, securities traders and investment managers expect the recent improvement in their business to be shortlived, with volume declines expected to resume next quarter.