A joint venture between Glasgow developer Elphinstone and the now bankrupt Harrogate-based developer City Lofts had been intending to start work on the £120m, 40-storey mixed use tower later this year.

However Ken Ross, chairman and chief executive of Elphinstone, said: 'The project is unlikely to happen in its original form.'

Gavin Angel, director of City Lofts St Vincent, the special purpose vehicle behind the tower, said: 'It is difficult to proceed with a project of the type [envisaged] in the current economic environment.'

City Lofts St Vincent, which is not in administration, will now work with the funders, New York-based Lehman Brothers, to find the best solution for the 1.4-acre site on the corner of St Vincent Street and India Street.

Sunday Times