The Conservatives have accused Labour of having sunk to “a new low” in its relations with the City, after the Treasury announced that Alistair Darling’s ambassador to the Square Mile was leaving and would not be replaced.

Sir James Sassoon, the former Warburg investment banker, will on Friday step down as the chancellor’s “special representative for promotion of the City”. His exit from the part-time role, which he had held since the start of 2006, was made at his request, said the Treasury.