The downward revisions will be a blow to Labour which has made boosting economic growth its top priority.
It has promised to deliver the highest sustained economic growth in the G7 group of rich nations.
Separate figures out last week showed inflation – the rate at which prices increase over time – is rising at its fastest pace since March.
The Bank of England voted to hold interest rates on Thursday, stating it thought the UK economy had performed worse than expected, with no growth at all between October and December.
Firms have warned that measures announced in October’s Budget including a rise in employer national insurance and a higher minimum wage could push them into raising prices and reducing the number of new jobs they create.
The CBI, which claims to represent 170,000 firms, said companies expect to “reduce both output and hiring” and raise prices as a result of the tax rises.
The survey, based on responses of 899 firms between 25 November and 12 December, said private sector businesses across all industries expected a “steep decline in activity” in the first three months in 2025.
“Expectations are now at their weakest in over two years,” said Alpesh Paleja, the CBI’s interim deputy chief economist.
“Businesses continue to cite the impact of measures announced in the Budget – particularly the rise in employer NICs – exacerbating an already tepid demand environment.
“As we head into 2025, firms are looking to the government to boost confidence and to give them a reason to invest.”
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