Gordon Brown must improve his relationship with business, bosses have warned.

The CBI urged the chancellor to use his Budget later this month as a chance to change the tax system to halt a decline in the UK's competitiveness.

The business group warned on Wednesday that there had been "relentless and damaging" rises in company tax bills.

Its Budget submission to the Treasury argued that despite tight finances, a package of incentives - worth up to £1 billion - could promote enterprise.

"The government has gone some way to promoting enterprise in the UK but it should sit up and take notice when top business decision makers start saying the UK is declining as an investment location," said CBI director general Digby Jones.

"Trying to shoot the messenger will not change what's happening on the business frontline."

Tax cuts call

The CBI said the chancellor should make a series of across-the-board cuts and move away from his focus on complex targeted tax breaks.

Bosses wanted to see either a cut in employers' national insurance or corporation tax.

The CBI also called for more firms to be made eligible for discounts on the climate change levy.

There was also a call for reassurance that there will be no rise in local business rates.

"In recent weeks there have been encouraging signs that the Treasury is getting our message," said Jones.

"Successive Budget speeches show the Treasury understands the importance of enterprise. But Mr Brown will not win business support by giving with one hand and taking with the other.

"Firms will be utterly disillusioned if there are more tax rises, whether by stealth or the local government back door."

The CBI gave an upbeat prediction of how the economy would perform over the coming year but said the fledgling recovery in profits would have to be nurtured.

"The government can look forward to some better economic news this year, but it is going to need it because public finances are under real pressure and there is little sign of public sector productivity improvement," said Jones.

"It is absolutely crucial that the chancellor does nothing that could throw the recovery off course."