Markit's and the Chartered Institute of Purchasing & Supply's services purchasing managers' index (PMI) for the U.K. fell to 56.5 in May from 59.5 in April, missing expectations for a fall to 59.2. It was the lowest level since December 2014.

A reading above 50 indicates expansion in the sector.

The decline was driven by a lower increase in new business.

"Rate hikes later this year should not be ruled out: there are signs that the disappointing rate of expansion is only temporary, linked to uncertainty surrounding the general election, and the surveys point to rising inflationary pressures as well as a further tightening of the labour market," the Chief Economist at Markit Chris Williamson said.