The 10pm curfew on bars and restaurants has sent footfall tumbling for a second week running as opposition over the crackdown mounts from ministers and businesses.
High street footfall was 7.1pc lower last week than during the prior seven days, data firm Springboard found. It was down 3.5pc across all retail areas. This followed drops of 3pc and 6.8pc respectively in the previous set of figures.
Restrictions designed to limit the spread of Covid threaten to derail a recovery in Britain's crucial services sector, experts warned, after the latest purchasing managers' index (PMI) survey of business activity pointed to a third month of bumper growth in September.
It came as Chancellor Rishi Sunak railed against the “frustrating” curfew and hinted in an interview with The Sun that ministers were split over the measure.
Springboard’s analysts blamed the curfew for a sharp drop-off in footfall at the end of last month, stoking fears of the damaging economic fallout of the new measures. Diane Wehrle at Springboard warned that the restrictions are hitting town and city centres hardest.
She said: "High streets - where the majority of evening economy activity occurs - are feeling the effect, with a drop in footfall post 7pm that is twice as great as that during working hours, and four times as great post 11pm."
Meanwhile, the PMI survey by statistics company IHS Markit showed that the services sector enjoyed its third straight month of growth in September but firms continued to shed jobs as optimism about the future cooled.
The closely watched survey dropped from a five-year high of 58.8 to a still-strong 56.1 last month. Any reading above 50 indicates growth.
Economists warned that the sector is likely to put in a far less impressive performance in the months ahead as Covid cases rise and restrictions are tightened.
Services - which account for around 80pc of the economy - clocked up their slowest month of growth since before bars and restaurants were reopened in July. The industry was held back by the end of Rishi Sunak’s Eat Out to Help Out meal subsidy scheme and a fading boost from business reopenings.
Businesses are taking an extremely cautious approach to cost management and hiring, the survey found, as job losses across the economy mounted for the seventh month in a row.
Chris Williamson, economist at IHS Markit, said the services sector had shown “encouraging resilience” even as the dining discount was withdrawn but warned of a slew of concerns piling up for firms.
He said: “Companies grew increasingly worried about the impact of a second wave of virus infections and the gradual withdrawal of government support, especially the furlough scheme.
“While the third quarter will inevitably see a strong economic rebound, growth in the fourth quarter looks likely to be far less impressive.”