Businesses have suffered a trade slump and a sharp drop in cash reserves as economic pressures mount, according to new data.

More than a quarter of companies said their turnover decreased in September, reflecting slower trade and reduced sales, the Office for National Statistics (ONS) found.

The hospitality industry suffered the biggest declines last month as businesses face higher costs and waning demand from cash-strapped consumers.

More than half of companies in the accommodation and food services sector said that turnover dropped in September, compared to August – double the average across all sectors.

A startling amount of companies also revealed that they have limited cash reserves should there be a need to access emergency funds.

More than a tenth of businesses said they had no cash reserves at all in early October, while 28% said they had three months or less.

The figure rises significantly for companies in the education industry, 51% of which reported having either none or limited cash reserves.

UK businesses are being racked which higher costs which they say have continued to rise in recent months, the ONS’s data showed.

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