Britain's business leaders have warned the new government to avoid introducing any 'knee-jerk' tax rises as it works to reduce the national deficit.

Coming soon after the previous government went ahead with its plans to introduce a 50p rate of tax on top earners, the City-based London First has argued that such tax increases place the UK's reputation as a welcoming place to do business in jeopardy.

In particular, the lobbying group's latest report has advised that hastily-introduced taxes will not only damage businesses and employees, including contractors, but could also harm the economy as a whole.

John Dickie, director or strategy and policy at London First, explained: "The UK has traditionally been viewed as having a business supportive tax regime, but recent changes which came from nowhere – like the non-doms tax, new 50 per cent top rate income tax and the bankers' bonus tax – have put this reputation under threat."

Just recently, London First stated its support for the government's spending cuts, noting that this policy "sends the right signal to businesses and worried markets".