The latest quarterly survey of the industry showed business volumes and profitability rose sharply for the fourth consecutive quarter.

In total, 51% of businesses said they were more than three months ago while only 7% were less .

The CBI said the balance of plus 44% was the strongest showing in five years.

The figure compares with a balance of 29% in the previous survey, published in December.

‘Substantial boost’

The CBI’s head of economic analysis, Doug Godden, said the study showed companies were confident about their demand .

“A year of solid business growth, the revival in the stock market last year and growth in the wider economy have given financial services firms a substantial boost,” Mr Godden said.

But he added that the full impact on confidence of the fatal bomb attacks in Madrid had yet to be seen.

While volumes rose across the sector, sharp contrasts could be seen between different business areas.

General insurers, fund managers and building societies all recorded strong growth, while banks and insurance brokers said they had only seen slight growth.

The CBI also said that insurance brokers suffered big falls in profitability, but profits at fund managers, securities traders and general insurers grew the fastest.