Isis’ “business model” is failing as jihadis lose their grip on territory and the vital oil and tax revenue it brings, a new report has found.

The so-called Islamic State is believed to be the richest terrorist group in the world, exploiting natural resources and looting antiquities seized in its lightning advance across Syria and Iraqi in 2014.

Civilians trapped under the militant group’s brutal rule are subjected to punitive taxation, confiscations and fines, while millions of pounds are made in ransoms from kidnappings.

(Statista (Statista)

But research by the International Centre for the Study of Radicalisation and Political Violence (ICSR) at King’s College London has found that Isis’ revenue streams are starting to dry up as the group loses territory and international air strikes target its oil fields.

The group’s true wealth is difficult to determine, but its annual revenue has plummeted from an estimated $1.9bn (£1.5bn) in 2014 to $870m last year.

Peter Neumann, director of ICSR said that while the exploitation of vast territories has been lucrative for Isis, the bureaucracy entailed brings expenses.

“It needs to fix roads,” he told the Associated Press. “It needs to pay teachers. It needs to run health services. It needs to pay for these things that al-Qaeda never had to.”

The report found no evidence that rumoured donations from foreign supporters and governments “continue to be significant”, while taxation has become Isis’ main revenue source after its ability to make money from looted antiquities in new territory faded.

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Oil remains the group’s second-largest money-maker, but Isis’ trade has declined rapidly since the start of a targeted air campaign by the US-led coalition.

Operation Tidal Wave II, launched in October 2015, aims to destroy oil transport and infrastructure to cut the group’s funding, seeing oil wells and tankers repeatedly bombed despite concern for civilian workers.

On Thursday, US Central Command announced strikes that destroyed oil tankers, refinement stills and wellheads in Isis’ Syrian strongholds of Abu Kamal and Deir ez-Zor, while Russian strikes have also hit oil facilities.

The group has been forced to reduce salaries and perks for fighters, as well as increasing taxation and fees to make up the cash shortage, leaked documents from its Bayt Mal al-Muslimeen treasury show.

Estimated earnings from the looting and confiscation of artefacts from historical sites and abandoned homes across Isis territory is also on the decline.

A federal lawsuit filed in the US to recover four artefacts put up for sale by Isis showed it received at least 20 per cent of the proceeds of items excavated from archaeological sites under its control and taxed antiquities sold in its territories, even kidnapping a child to force one merchant to pay.

(ICSR (ICSR)

Isis’ coffers were also hit by the Iraqi government’s decision to stop paying salaries to government employees living in its territories in August 2015, and efforts to reduce cross-border smuggling with Turkey and Kurdish-controlled areas in Iraq.

Mr Neumann compared Isis’ funding strategy as a “pyramid scheme” requiring constant expansion, which has now been brought to a halt.

“The business model was also to constantly expand and to plunder the areas that were becoming part of the caliphate,” he said.

Britain and other allies are training thousands of troops to fight Isis on the ground in Iraq and supporting the predominantly Kurdish Syrian Democratic Forces alliance over the border.

Ground operations, backed by international air power, have seen Isis driven out of key strongholds including Fallujah, Tikrit and Jarablus, with militants currently battling to hold Mosul as enemies close in on their de facto capital of Raqqa.

By November last year, the group had lost 62 per cent of its mid-2014 “peak” territory in Iraq and 30 per cent in Syria, according to coalition figures, leaving it fewer civilians and businesses to tax and less control over natural resources.

In pictures: Mosul offensive Show all 40 1 /40 In pictures: Mosul offensive In pictures: Mosul offensive A doctor carries an Iraqi newborn baby at a hospital in Mosul, Iraq July 18, 2017. Reuters In pictures: Mosul offensive Iraqi girls play at a yard of a school in Mosul, Iraq July 18, 2017alal Reuters In pictures: Mosul offensive A woman on crutches who is a relative of men accused of being Islamic State militants is seen at a camp in Bartella, east of Mosul, Iraq July 15, 2017. Picture taken July 15, 2017. Reuters In pictures: Mosul offensive A displaced girl, who fled from home carries a doll at Hamam al-Alil camp south of Mosul, Iraq July 13, 2017. Reuters In pictures: Mosul offensive Iraqi federal police members and civilians celebrate in the Old City of Mosul on 9 July 2017 after the government's announcement of the "liberation" of the embattled city. Iraqi Prime Minister Haider al-Abadi's office said he was in "liberated" Mosul to congratulate "the heroic fighters and the Iraqi people on the achievement of the major victory" AFP/Getty Images In pictures: Mosul offensive A picture taken on 9 July 2017, shows a general view of the destruction in Mosul's Old City. Iraq will announce imminently a final victory in the nearly nine-month offensive to retake Mosul from jihadists, a US general said Saturday, as celebrations broke out among police forces in the city. AFP In pictures: Mosul offensive Members of the Iraqi federal police raise the victory gesture as they ride on a humvee while advancing through the Old City of Mosul on 28 June 2017, as the offensive continues to retake the last district held by Islamic State (IS) group fighters. AFP/Getty Images In pictures: Mosul offensive Smoke billows as Iraqi forces advance through the Old City of Mosul on 26 June 2017, during the ongoing offensive to retake the last district held by the Islamic State (IS) group. AFP/Getty Images In pictures: Mosul offensive An Iraqi man wearing the green scarf of the Shi'ite faith kisses an Iraqi Army soldier on safely reaching the Iraqi forces position as Iraqi civilians flee the Old City of west Mosul where heavy fighting continues on 23 June 2017. Iraqi forces continue to encounter stiff resistance with improvised explosive devices, car bombs, heavy mortar fire and snipers hampering their advance. Getty Images In pictures: Mosul offensive A picture taken from the inside of an Iraqi forces armoured vehicle shows residents walking through a damaged street as troops advance towards Mosul's Old City on 18 June 2017, during the ongoing offensive to retake the last district still held by the Islamic State (IS) group. Military commanders told AFP the assault had begun at dawn after overnight air strikes by the US-led coalition backing Iraqi forces. They said the jihadists were putting up fierce resistance. AFP/Getty Images In pictures: Mosul offensive Iraqi Army soldiers advance in a destroyed street after an Iraqi forces airstrike targeted an Islamic State sniper position 17 June 2017 in al-Shifa, the last district of west Mosul under Islamic State control. IS snipers, as well as car and suicide bomb attacks continue to hinder the Iraqi forces efforts to retake the final district. A series of airstrikes by Iraqi helicopter gunships attempted to hit multiple Islamic State sniper positions in al-Shifa. Getty Images In pictures: Mosul offensive An Iraqi soldier frisks a displaced Iraqi man at a temporary camp in the compound of the closed Nineveh International Hotel in Mosul on 16 June 2017 which was recovered by Iraqi troops from Islamic State group fighters earlier in the year. A screening centre set up in the compound's fairgrounds sees a constant stream of Iraqis fleeing the battle for Mosul, awaiting their turn to be checked by the Iraqi forces who are searching for suspected Islamic State (IS) group members. The small fairground lies at the end of a pontoon bridge across the Tigris recently opened to civilians that is the only physical link between the two banks of the river. AFP/Getty Images In pictures: Mosul offensive Iraqis staying at the al-Khazir camp swim in a river near the camp for internally displaced people, located between Arbil and Mosul on 11 June 2017. AFP/Getty Images In pictures: Mosul offensive Iraqi government forces drive on a road leading to Tal Afar on 9 June 2017, during ongoing battles to retake the city from Islamic State (IS) group fighters. AFP/Getty Images In pictures: Mosul offensive An Iraqi policeman carries a poster bearing an image of Mosul's iconic leaning minaret, known as the "Hadba" (Hunchback), on 22 June 2017. AFP/Getty Images In pictures: Mosul offensive Iraqis stand in line to receive food aid in western Mosul's Zanjili neighbourhood on 7 June 2017, during ongoing battles as Iraqi forces try to retake the city from Islamic State (IS) group fighters. Living conditions in Mosul have again deteriorated since the start of the Iraqi government's offensive on the city in October in which they retook a large part of the west of the city. AFP/Getty Images In pictures: Mosul offensive Displaced Iraqis carry lightbulbs and sacks as they evacuate from western Mosul's Zanjili neighbourhood as government forces advance in the area during their ongoing battle against Islamic State (IS) group fighters on 13 May 2017 AFP/Getty Images In pictures: Mosul offensive A member of the Iraqi Counter-Terrorism Service (CTS) flashes the victory gesture as he patrols in western Mosul's al-Islah al-Zaraye neighbourhood on 13 May 2017 AFP/Getty Images In pictures: Mosul offensive Iraqi army soldiers from the 9th armoured division on a truck flash the sign of victory as they drive back from Mosul to the town of Qaraqosh (also known as Hamdaniya) Getty In pictures: Mosul offensive Members of Iraqi forces flash the sign of victory on their vehicle as they advance towards Hammam al-Alil area south of Mosul Getty In pictures: Mosul offensive A member of Iraqi security forces gestures in Hammam al-Alil, south of Mosul, Iraq Reuters In pictures: Mosul offensive Iraqi children, one flashing the sign of victory, greet Iraqi army's soldiers from the 9th armoured division in the area of Ali Rash, adjacent to the eastern Al-Intissar neighbourhood of Mosul Getty In pictures: Mosul offensive Peshmerga forces look at a tunnel used by Islamic State militants near the town of Bashiqa, east of Mosul, during an operation to attack Islamic State militants in Mosul, Iraq Reuters In pictures: Mosul offensive An Iraqi soldier takes a photograph with his phone as his comrade stands next to a detained man, whom the Iraqi army soldiers accused of being an Islamic State fighter, who was fleeing with his family in the Intisar disrict of eastern Mosul, Iraq Reuters In pictures: Mosul offensive Iranian Kurdish female members of the Freedom Party of Kurdistan (PAK) hold a position in an area near the town of Bashiqa, some 25 kilometres north east of Mosul Getty In pictures: Mosul offensive Iraqi families, who fled their homes in Hamam al-Alil, gather on the outskirts of their town Getty In pictures: Mosul offensive Displaced people walk past a checkpoint near Qayara, south of Mosul, Iraq AP In pictures: Mosul offensive Iraqi families who were displaced by the ongoing operation by Iraqi forces against jihadists of the Islamic State group to retake the city of Mosul, are seen gathering in an area near Qayyarah In pictures: Mosul offensive A boy who just fled Abu Jarbuah village is seen with his family at a Kurdish Peshmerga position between two front lines near Bashiqa, east of Mosul, Iraq Reuters In pictures: Mosul offensive An Iraqi child eats a pomegranate upon the arrival of Iraqi forces in the village of Umm Mahahir, south of Mosul Getty In pictures: Mosul offensive People who just fled Abu Jarbuah village sit as they eat at a Kurdish Peshmerga position between two front lines near Bashiqa, east of Mosul, Iraq Reuters In pictures: Mosul offensive A couple who just fled Abu Jarbuah village are escorted by Kurdish Peshmerga soldiers Reuters In pictures: Mosul offensive Women carry a boy over a wall as civilians flee their houses in the village of Tob Zawa, Iraq AP In pictures: Mosul offensive An Iraqi soldier and a civilian ride a motorbike as smoke rises behind them, on the road between Qayyarah and Mosul Getty In pictures: Mosul offensive A member of Iraqi forces, wearing a skull mask, waits at a checkpoint for people fleeing the main hub city of Mosul Getty In pictures: Mosul offensive An Iraqi soldier sits at a checkpoint in an area near Qayyarah Getty In pictures: Mosul offensive Iraqi men prepare food portions for Iraqi forces deployed in areas south of Mosul Getty In pictures: Mosul offensive Iraqi forces celebrate upon the arrival of vehicles bringing food to them Getty In pictures: Mosul offensive Iraqi childen smoke cigarettes upon the arrival of Iraqi forces in the village of Umm Mahahir, south of Mosul Getty In pictures: Mosul offensive A member of Iraqi forces distributes drinks to children in the village of Umm Mahahir, south of Mosul Getty

The trend looks set to continue but the ICSR report, written in conjunction with the EY organisation, cautioned that the financial losses do not necessarily make the group less of an international threat.

While Isis’ Paris attack – their deadliest in Europe – was centrally organised and commissioned in Syria, the Nice lorry massacre and countless other atrocities were conducted by supporters at no cost to jihadi leaders.

In bombing attacks Isis favours triacetone triperoxide (TATP), an explosive that can be cheaply made following instructions issued in the group’s propaganda from readily and legally available products found worldwide.

Almost daily bombings in Baghdad and recent atrocities in Pakistan, as well as numerous plots uncovered in Europe, demonstrate Isis’ continued ability to inflict bloodshed and carnage.

“The decline in revenues may not have an immediate effect on the group’s ability to carry out terrorist attacks outside its territory,” the report cautioned.