Businesses slashed investment at the fastest pace since records began in 1966 in the year to the end of the second quarter, data showed yesterday. The figures prompted new fears over the prospects for a sustainable recovery as company results pointed to further cutbacks.

Investments ranging from building work to vehicles and computer software purchases fell by 18.4%, the sharpest year-on-year decline in at least 43 years.

Economists believe rapidly shrinking investment spending amid a shortage of credit could undermine the recovery this year and next and endanger the growth prospects after that.

Financial Times