Britain is in a 'growth emergency', the Business Secretary admitted yesterday – as it was revealed that Budget forecasts will tomorrow downgrade the UK's outlook.

As the Office for Budget Responsibility (OBR) prepared to lay bare the dismal reality of Labour's handling of the economy, Peter Kyle conceded that the nation was suffering from 'low, slow uneven growth'.

He was also forced to admit that it was the Labour Government's own punishing tax policies that have driven an exodus of wealth creators from Britain.

And last night, Rupert Soames, chairman of the Confederation of British Industry (CBI), blamed Labour's 'ill-judged' Budget last year and an 'incoherent' strategy this time around for making things worse.

Mr Soames said a 'deliberate policy' of 'kite-flying' about measures to be announced tomorrow, – some of which have then been rolled back – had added to the pain and created 'lasting damage'.

Speaking to business leaders, Mr Kyle sought to reiterate Labour's claim that the previous Conservative government is to blame. But OBR's figures, to be published alongside the Budget tomorrow, are set to reveal that in the months since Chancellor Rachel Reeves' spring statement in March, the economic situation has deteriorated.

They will downgrade annual growth forecasts for next year and for the remaining years of the current parliament, Sky News reported yesterday. It comes after previous reports that the OBR has slashed its outlook for productivity growth – the ability to do more with less.

Those numbers underpin the forecasts for growth of the overall economy. And that ultimately makes it more difficult for the Chancellor to balance the books because lower growth means less tax revenues for the government to spend on public services.

Economists believe that will result in a £30billion financial black hole that Rachel Reeves will seek to repair largely with tax hikes – even though critics are warning that these could further damage growth and create a so-called 'doom loop'.

Her last Budget has already been blamed for holding back the economy, after imposing some £40billion of tax rises, largely through a £25billion raid on employer national insurance.

Recent figures show that unemployment has risen to its highest level in four years, growth has slowed to a crawl and inflation is the highest among the G7 group of advanced economies.

Yesterday, business leaders gathered at the CBI's annual conference were told by Mr Kyle that Britain needs to reverse nearly two decades of 'low, slow uneven growth'.

The Business Secretary also turned on critics of Labour's economic record, describing them as 'modern day Jeremiahs' who 'take a perverse pleasure in predicting economic doom and gloom'. But he also lamented the economy's slow progress.

'We inherited a growth emergency and we are still in it,' he said. 'In an emergency situation you have licence to do things you don't have at other times, and I'm looking really closely at what those measures are.

'What are things we can do that shock our economy into growth? To inspire our economy into growth? That's the kind of debate I think we need to have.' Yet in a Sky News interview earlier, Mr Kyle admitted that it was a 'worry' for the Government that some people felt the need 'to leave the UK to succeed'. 

It followed reports that Indian-born steel tycoon Lakshmi Mittal has quit Britain and will now spend much of his time in Dubai and is registered in Switzerland for tax.

Mr Kyle admitted that entrepreneurs 'have gone to America actually in their droves, because they haven't had the funding that they need in this country to succeed'. And he agreed when asked whether it was the case that 'some of it is because of the tax decisions of this Labour Government'.

Business leaders at the CBI conference expressed frustration about Labour's economic record.

Mr Soames described Ms Reeves' first Budget last year as 'an ill-judged Budget' that 'has hit both growth and employment'. Labour's 'flaky' majority had left it unable to pass necessary legislation, he added. 'It is almost unprecedented that a government with a majority of that size cannot deliver key parts of its programme,' said Mr Soames.

'This is a government whose first contact with the enemy or events has left it bruised and with no room to manoeuvre.'

He expressed frustration that while talking about wanting to boost jobs, Labour had introduced the National Insurance increase along with workers' rights policies that will make it harder to hire people.

'There is an incoherence in government strategy,' added Mr Soames. And he told the Daily Mail that 'a confusion of kite flying' ahead of the Budget 'has had an impact on how businesses think and what they do'.

He said: 'It's not good enough to say it happens at every Budget – it doesn't happen like this. It is confusing consumers and it is confusing businesses.

'I have never seen anything as intense as this or over such an extended period of time.'

Mr Soames added: 'I think it's unhelpful to the economy, I think it's unhelpful to foreign investors and I don't believe that this is just something that's happened by accident.

'It's a deliberate policy to do it, and if that is the case then it would be better that they had a different policy.

'I think it has done damage and I think that they would respond that it's only for a few weeks. But there is actually lasting damage.'