The huge state-backed bank bail-outs in Europe and the US, while necessary to prevent a collapse of confidence in the financial system, have forced banks to withdraw from overseas markets in order to concentrate their limited resources at home. For some observers this process, if left unchecked, will deepen the global slump and reverse decades of globalisation.

The Institute for International Finance, an association of large banks, this week forecast that net capital flows to emerging markets would fall to $165bn this year – less than a fifth of the level two years ago. Banks are expected to make a net withdrawal of capital, the IIF said.

The sharp reversal of capital flows appears at least partly due to political pressure on banks, especially those that have received large doses of state support, to sacrifice international operations in favour of maintaining lending to domestic consumers and companies.