CBI president Sir John Egan is to warn that business is increasingly alarmed by "the snail's pace" of the delivery of public sector reforms.
He will make the comments tonight when he and chancellor Gordon Brown address the CBI annual dinner in London.
Egan will deliver a progress assessment on the public investment programme, which has had massive funding from a £6bn annual rise in business taxes since 1997.
He will say that the Government's plans are in danger because of: an organisational inability to spend money efficiently and bring about change to political dogma within the trade union movement which is causing paralysis.
The CBI points to government figures showing public sector employment and output are going up at the same pace, suggesting productivity growth is negligible.
Public sector output increased by only 2 per cent in the past year despite spending rising by 7 per cent, with most of the extra money absorbed by rising costs.