GOVERNMENT policies could hit job creation in Kent as the country "sleepwalks towards decline", a top boss has warned.

CBI director general Digby Jones said the UK economy looked good on the surface but underneath there were serious concerns.

He blamed three factors - less labour flexibility, more tax, and an "uncompetitive" Europe.

Before speaking at a Rotary Club charity dinner in Folkestone on Friday, Mr Jones told the Express of his fears for inward investment into Kent.

He said the temporary workers directive, which gives temps similar rights to permanent staff, would hit jobs, pricing young people and mums out of the labour market.

The Government had introduced 16 new employment regulations in the last four years, claiming that it wanted to bring us into line with Europe.

"But we are competing with China, India, Brazil and America," Mr Jones said. "We don't want to be just more competitive than France and Germany, we want to be competitive globally."

He called on Prime Minister Tony Blair to put a stop to any more labour laws. Otherwise, some inward investors might decide to leave the county.

"That's what we must be really worried about and if we don't stop it now, there will be a serious sleepwalk to decline."

Kent was a great place for overseas investors to set up in business but the Government was becoming complacent about this "jewel in the crown." Ministers should cherish it and work to improve it.

Mr Jones revealed that many of his members would not be taking on extra staff because of the one per cent increase in National Insurance contributions. It was a "tax on jobs," he said, adding: "We are losing our reputation for being a tax-competitive economy."

Mr Jones' comments underlined the CBI's increasingly critical attitude towards the Government after initially warming to its "business-friendly" credentials.