Howard Davies, CBI director general, said: 'We are disappointed that the Government has been blown off course by the currency markets. We think the Government should urgently restore some certainty to its financial policy because the absence of clear guidelines will further weaken business confidence and the prospects for economic recovery.'
Despite the decision to rescind the second of yesterday's interest rate rises, industrialists and retailers nevertheless warned that higher borowing costs, if sustained, could plunge the economy deeper into recession and cause tens of thousands of job losses.
There was concern that the move would further weaken high street spending - seen as the key to revival.
Criticism was led by retailers and the recession-hit car and construction industries. Geoffrey Maitland Smith, chairman of Sears, the retail group, said: 'I can't believe it. I think it's April the first. This will bring us to a complete stop.
'It's bound to have a further damaging effect on the retail trade when we're already struggling.' The biggest danger was the damage it would do to people's feelings of job security.
Ian McAllister, chairman of Ford, Britain's biggest car seller, said it recognised the Government had to take action to restore stability and hoped that rates would come down quickly. 'However, a lack of consumer confidence remains at the root of our economic difficulties and we believe that the present circumstances make it even more imperative that the Government takes action to stimulate key areas of the economy,' he added.
Sir Brian Hill, president of the Building Employers' Confederation, said that the rise in interest rates was 'a total disaster for the British construction industry', predicting it would prolong and deepen the recession.
The Federation of Small Businesses said its members had been 'sacrificed by a government policy that is totally discredited'.