Britain is £490bn (€550bn) poorer than thought and no longer has any reserve of net foreign assets to help protect against any damage to the economy from Brexit.

The revision to the national accounts in the Office of National Statistic's (ONS) so-called Blue Book means that the UK's net international investment position has collapsed from a surplus of £469bn to a net deficit of £22bn - equivalent to a quarter of GDP.

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The revised figures show the country owns far fewer international assets and owes far more to foreign investors than previously thought.

"Half a trillion pounds has gone missing," said Mark Capleton, the UK rates strategist at Bank of America.

The effective writedown in the value of "UK plc" could make it harder to defend sterling and the British debt markets against a run on the pound after Britain leaves the European Union.

It comes as the Brexit talks in Brussels reach a crucial stage.

Treasury officials are already braced for "gloomy" OECD forecasts which are due to give its two-yearly update on the state of the UK economy today.

The ONS overestimated how many financial assets Britons own overseas and foreign investment in the UK.

Company profits were lower than forecast, and a large amount of supposed assets held by firms were in fact disguised forms of lending to UK households.

The revision is disturbing given that foreign direct investment into Britain has collapsed, plummeting from a net £120bn in the first half of last year to a net outflow of £25bn this year.

The apparent resilience of these flows shortly after the Brexit referendum was an illusion, since the funds had already been committed earlier.

The Bank of New York Mellon, the world's biggest custodian of assets, said there had been a marked deterioration over recent weeks in purchases of sterling stocks and bonds by 'real money' players such as pension funds and sovereign wealth funds.

Simon Derrick, the bank's currency strategist, said: "The outflows from the UK began in mid-August. The big buyers are disappearing."

Meanwhile, the Labour Party claims it is negotiating with Tory MPs to prevent the UK leaving the EU without a deal.

Shadow chancellor John McDonnell said parliament could stop the British government taking the country out of the bloc without an agreement in place.

But Tory MP Chris Grayling said the Labour MP was talking nonsense. The transport secretary insisted Britain would be successful even if it left without a deal and suggested crashing out would lead to British farmers growing more food to meet demand. (© Daily Telegraph, London)

Irish Independent