The question is set to be hotly debated at the Confederation of British Industry's annual conference which gets under way on Sunday in Birmingham.

The CBI expects the economy to "grind to a halt" by the middle of next year and has called on the Bank of England to cut interest rates by 0.5 percentage points at its next meeting on Wednesday and Thursday.

The CBI's latest quarterly industrial trends survey showed a slump in business confidence to its lowest level since 1980.

The survey prompted director general Adair Turner to warn of an "increased risk of outright recession", with a sharp downturn on the cards in the short term.

Employment legislation

In view of the state of the economy, the organisation's recently appointed president, Sir Clive Thompson, is set to emphasise his opposition to government policies that he regards as anti-business.

Business Correspondent Greg Wood: Regulations placing stranglehold on business

Sir Clive is vehemently opposed to greater "regulation" of business.

He is against laws such as the Working Time Directive which sets out the maximum number of hours that should be worked per week, and the minimum wage.

The CBI's information line has received a flood of calls from firms wanting advice on the working hours directive.

Adair Turner said many companies were in a "complete fog" about how to implement the complicated law and were choosing to ignore the regulations because of the confusion.

The legislation was creating "huge uncertainty and bureaucracy" for companies, he said.

Head-to-head

Sir Clive is also unhappy about proposals in the government's Fairness at Work White Paper, including more recognition for trade unions.

He is currently lobbying the government hard to water down some of the elements of the Fairness at Work proposals.

He wants to overturn plans for unlimited pay-outs awarded by tribunals to people who had been unfairly sacked, citing worries that incompetent directors would be able to win large settlements from their companies.

It seems likely a ceiling will be put back but at a higher figure of perhaps £50,000. The current figure is £12,000.

Pressure is also being exerted to water down plans to make employers recognise unions when at least 50% of the workforce were actually members or where 40% of the workers voted to be represented by a union.

The CBI wants automatic recognition dropped altogether or the figure raised to at least 60%.