Business investment declined 4.3% in the final quarter of last year, according to the Office for National Statistics.

This fall means that for the whole of 2009 business investment dropped a record 23.5%, the steepest year-on-year decline since 1967.

"In the face of weak demand and severe financial pressures, businesses have had little choice but to cut investment and stocks," said David Kern of the British Chambers of Commerce.

"This situation cannot go on indefinitely without damaging consequences. Unless investment picks up, the UK economy will lack the capacity to meet rising demand when the recovery gathers momentum."