The setback increases the possibility that the company will collapse into a government-supervised administration.

In theory, it is possible to make Thames Water investable — just about. It currently has about £20bn of regulated assets and £18bn of debt. Over the next five years, revenue — while growing — will do so more slowly than outflows.

The water company said the decision not to proceed with the equity raise created uncertainty around its plan to stay afloat, raising the prospect of nationalization.