Premier League clubs’ spending on new players dropped by 10 per cent to €510 million over the summer, with a big drop in investment in foreign players. Even Manchester City’s €136 million spree failed to see the top flight match the record sum of €567 million spent a year ago.

Football finance experts believe the high rate of the euro and 50 per cent tax rate for the very high-earners has contributed to the drop, particularly in terms of players coming from the continent.

Paul Rawnsley, director of Deloitte’s Sports Business Group, said the figures were no surprise — and net spending has dropped from €226 million to €90 million as clubs such as Manchester United, Arsenal and Liverpool resisted spending all their earnings from transfer income from Cristiano Ronaldo, Emmanuel Adebayor and Xabi Alonso.

Rawnsley said: He said: “Despite the significant spending by Manchester City, Premier League clubs’ transfer spending has dropped.

“There are a number of contributory factors — the exchange rate, the tax regime in Spain being more favourable to players and clubs, and perhaps clubs thinking there is less of a risk in buying established Premier League players than from overseas.”

Rawnsley does not expect the picture to alter next year either even if, as expected, the top flight benefits from a big rise in the value of overseas TV rights.

He added: “Economic conditions may improve in 2010 and the Premier League is expected to secure enhanced values for international media rights generating higher revenue for Premier League clubs.

“However, without further significant capital injections from owners, transfer spending is unlikely to exceed the record level achieved in 2008.”

Deloitte’s analysis shows Manchester City’s spending has represented 27 per cent of the total this summer, while Aston Villa, Liverpool, Sunderland and Tottenham have each spent more than €28 million on new players.