Figures for 160 practices in the south-east of England for Ramsay Brown and Partners show that profits fell to £117,120 in the first year of the pay freeze.
Accountants forecast a similar 7 per cent fall in profits for 2007/8. Figures for 100 practices at Surrey-based medical accountants PKF show a 6 per cent drop to £134,049.
These figures come as GPs face sharp criticism from the release of 2005/6 figures which show profits increases of 10 per cent.
This week the DoH also argued for the third successive pay freeze, the NHS Employers for increases of no more than 2 per cent and the BMA for up to 4.3 per cent.
Laurence Slavin, a partner with medical accountants Ramsay Brown, said practices had endured profits drops of up to 29 per cent in 2006/7.
This exceeds the worst predictions of a squeeze of 25 per cent.
Earnings are likely to fall a further 7 per cent in 2007/8, the second year of the pay freeze, with expenses already pared to the bone, Mr Slavin said.
It is unlikely that profits will be quite so high in other parts of the UK, bringing average earnings down.
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