There is little sign of the rehabilitation of the British pub as the effects of banishing smoking clientele to outside runs into an economic downturn, as the nation's drinkers begin spending less.

Punch Taverns, the UK's largest landlord with 8400 pubs around the country, said today that beer sales throughout the winter have been running 10% lower year-on-year and total like-for-like sales across the bar and food-serving hatch are down by almost as much as 3%.

Giles Thorley, the investment banker-turned-publican, and Punch's chief executive, admitted that trading in the opening weeks of 2008 had worsened from the closing months of 2007 and that there had been no pick-up either in the spring.

The performance of its 7600-strong estate of leased pubs has worsened from a year-on-year fall of 0.8% reported in January, to a drop reported today of 2%.

In its 800 managed pubs, like-for-like sales are down 2.8% from a figure of 2.2% reported three months ago.

The company said: "Following a satisfactory start to the financial year [from 1 September], trading in the second quarter [the three months to 1 March] was more subdued.

"[Current] trading has continued broadly in line with that of the second quarter.

"In the short-term, trading conditions [up to the end of August] are likely to remain challenging given the impact of duty increases and continued pressure on disposable incomes."

However, Thorley believes the picture, at least on a like-for-like basis, may improve in the coming months as trading figures will compare with last summer, which was blighted by weeks of rain, leading to the floods in July - the month in which the smoking ban went nationwide in the UK.

"This summer has got to be better weatherwise. We are approaching the first anniversary of the smoking ban," he said.

"The underlying ongoing effect of the smoking ban is a little hard to calculate.

"In Ireland, when it introduced the ban, the fall at its worst was 3%, but then their ban did not come in at the time of a consumer downturn."

Having disposed of 9% of its estate and upgraded many more pubs, Punch's reported pre-tax profits in the half year to 1 March came in at £29 million lower at £109 million, though on an under-lying basis stripping out exceptional items the business reported pre-tax profits up marginally at £133 million.

There was some dividend cheer for shareholders who have seen the value of their investment crater in recent months, with today's price down 60% over the last year to today's 579¾p.

The interim payout is rising 8% to 5.5p.