The U.K. government has been the most forceful in Europe in terms of dealing with the financial crisis.

But that hasn’t stopped capital from fleeing the continent’s financial capital.

The latest data from the Bank of England indicate that money held in the U.K. by foreign investors dropped $1 trillion in the last nine months of 2008.

A whopping $597.5 billion escaped in the fourth quarter alone, following a small inflow during summer, and $682.5 billion disappeared during the second quarter, a record for decades.

Those numbers don’t exactly fuel confidence in London’s status as the financial capital of Europe, especially as bank after bank fails in the country.

This week, Lloyd’s became the latest to ask the government for more handouts.

And the pound has dropped 25 percent since mid-2007. That decline could turn into an avalanche if foreign investors really lose confidence.

“The outflow of overseas banks' U.K. holdings is not surprising,” Colin Ellis, an economist at Daiwa Securities, tells The Independent of London.

“Indeed foreign investors in general will still be smarting from the sharp fall in the exchange rate last year, as many U.K. liabilities are priced in sterling terms.”

Bottom line, Ellis says: “That raises the question of what could possibly tempt overseas investors to return to the UK. Further heavy outflows of funds are probably a given.”

Investment guru Jim Rogers agrees. He told Bloomberg recently that “the U.K. is finished” and investors should sell any sterling holdings.