A "virtual boycott" of City backing for smaller companies has caused a dearth of stock market flotations and could strangle British industry, according to a survey published this week.

Only 10 companies issued shares on the London Stock Exchange in the first quarter of the year - the fewest for more than a decade, according to accountant KPMG. Flotations are one of the main ways of raising cash for small and medium sized companies. But City distaste for investing in any but the bigger firms is putting off smaller companies from issuing shares.