In an illustration of how Britain is tightening its belt amid the squeeze on its finances, car sales in the UK fell13 per cent last month, their sharpest drop since December 2006.

Moreover, some of the most expensive marques took the biggest hits. The luxury brands of Aston Martin and Bentley suffered sharp British sales falls in July, of 44 per cent and 46 per cent, respectively, and so far this year, their sales have contracted by 24 per cent and 17 per cent. Land Rover's sales fell 38 per cent in July.

However, Aston Martin said that the figures, or even data over several months, did not reflect the health of its business because they did not record its sales overseas.

Sales to individuals in the UK, rather than businesses, slid by nearly 17 per cent amid increasingly weak consumer confidence. The Society of Motor Manufacturers and Traders (SMMT) said that the fall to 153,420 vehicles was greater than expected.

Paul Everitt, the SMMT chief executive, said that the drop reflected falling consumer confidence across the economy. “Rising fuel and household bills, alongside falling house prices, are making consumers reluctant to commit to new expenditure,” he said.

Malcolm Barr, a JPMorgan Chase economist, said: “Few have harboured much doubt that June's plunge in retail sales was the harbinger of more weakness to come.”

July and August car sales tend to be low. The SMMT said that the industry would look instead to September, when a new registration plate is issued, for a clearer indication of underlying market trends.

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