The flow of money through the global financial system is stuck at the same level as a decade ago, raising fresh concerns about the strength of the economic recovery following six years of financial crisis.

A dramatic slowdown in cross-border capital flows - shown in an analysis for the Financial Times by the McKinsey Global Institute - highlights how the US subprime mortgage and eurozone debt crises threw into reverse the globalisation of finance, and raises doubts over whether flows will ever return to their pre-crisis peak.

The contraction could fuel worries about the pace of economic recovery in the advanced world but also masks a shift in the economic order towards emerging market economies and away from European banks.

In mid-2007 cross-border capital inflows into the G20 group of economies were equivalent to almost 18 per cent of those countries’ economic output. In mid-2013 the equivalent figure was 4.3 per cent. In dollar terms, G20 capital cross-border inflows have since fallen 67.5 per cent from mid-2007.

“You would have expected them [capital flows] to have fallen compared with the bubble years. What is surprising is the magnitude of the fall. Rather than seeing a rebound, we are seeing stagnation,” said Susan Lund, partner at McKinsey. She warned that the effects would be felt in the real economy and there was “a chance that financial globalisation as we know it may never recover”.

Not only have capital flows shrunk, their composition has changed. Much of the contraction since 2007 is the result of weakened banks - especially in Europe - slashing loan books and retreating behind national borders, so that bank lending accounts for a much smaller proportion of total cross-border flows than in 2007.

As a result of the collapse in bank lending, flows into foreign direct investment account for a much larger share than before the crisis - which, given that most reflect long-term investment decisions, is possibly a harbinger of greater stability in the future. Meanwhile, emerging markets account for a much larger share of capital flows than before 2008.

Although the contraction in capital flows could signal that the global economy is entering a phase of at best sluggish growth, their role in promoting economic growth is disputed.

Cross-border ‘carry trades’ — borrowing in low-interest economies to invest elsewhere — proved profitable for international investors, said Hélène Rey, professor of economics at the London Business School.

“But what benefit does the rest of the world get from these flows? It is unclear what the welfare benefits are from capital flows. Given [the increase] since 1995, if there were benefits [to the wider economy], somehow we should have been able to pick them up.”