In a report aimed at altering the government's attitude towards company tax, the CBI claimed that, due to the 1997 Budget, the total annual tax bill for the business sector would be over £7bn in 2005/06. It said the country's main company taxes stands at around 9% of GDP, above the average of its main trading rivals.

The report says the UK is not that different from Germany, where business taxes are 10.1 % of gross domestic product. But worse than the US with 7.3%, with only France taking a significantly higher share of national income, at 14.4%.

Digby Jones, the director-general of the CBI, said: 'This is why so many business leaders are increasingly alarmed by the worsening situation - their concern matter to everyone - jobs and this country?s future depend on them.'

The Treasury has criticised the report's calculations and accused the lobby group of being contradictory.