Company directors have warned the Government that 'tax and spend' policies are damaging the UK economy because of the trade-off between higher taxation and economic growth.
The Institute of Directors (IoD) said two-thirds of the projected rise in the tax burden was still to feed through.
Its chief economist Graeme Leach said: "In an advanced economy, such as the UK's, extra public spending is unlikely to increase long-term growth, but extra taxation is likely to reduce it.
"The double jeopardy from taxation and demographics is just around the corner."
The IoD went on to say there should be a new third rule for fiscal policy to reduce the tax burden as a proportion of the size of the economy.
The two existing fiscal rules were insufficient to restrain tax and spend policies, the institute claimed.
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