Labour's plans to increase business rates will prove unpopular with companies, the CBI will warn the government today.

As Gordon Brown fails - narrowly - to meet his forecasts for government borrowing, the CBI's intervention reflects fears that business will feel the pinch of possible tax rises in the next Parliament.

Local government minister Nick Raynsford told the FT this month that he was considering higher business rates to alleviate the burden on council taxpayers.

The CBI said this would "seriously undermine business confidence in government" in a similar way to the rise in National Insurance contributions.