Failure to overhaul ageing road and rail networks and make decisions to fund vital infrastructure projects is deterring business from investing in Britain and holding back growth, according to a report by the Confederation of British Industry.

The business group said that government proposals to pull the plug on much of its infrastructure spending as part of planned austerity measures was a mistake that would damage Britain's competitiveness. It urged ministers to override local opposition to major national infrastructure projects by sponsoring debates at a national level and votes in parliament that are binding on MPs.

John Cridland, the CBI's director-general, warned that businesses wanted swift action to revamp essential elements of Britain's infrastructure and the commitment to see the projects through to completion.

He cited the A14 link road to Felixstowe, Suffolk, which processes 40% of container traffic, as a candidate for upgrading. He said there was also a need to expand the rail network to increase capacity for passengers and containers to prevent extra cars and lorries clogging the roads.

A survey of businesses by KPMG for the CBI found that 58% rate Britain's infrastructure worse than other EU countries, when judged on quality, value for money and reliability. Just 26% of firms saw the UK as a favourable destination for infrastructure investment.

Cridland said public-private partnerships are the key to kick-starting investment projects, despite the controversy surrounding the private finance initiative, which has been the mainstay of private involvement in public infrastructure investment and was roundly condemned as overly costly and inefficient by two recent parliamentary reports.

He said private contractors should be allowed to charge tolls for new roads and said the A14 could be joined by an extension of the M6 toll road around Birmingham as far as Manchester.

"We need ministerial decisions that get spades in the ground and people working now," he added. "There are large amounts of business capital waiting to be unlocked if the government achieves a step-change on transport, for example with the introduction of road tolls. Capital investment must return to pre-recession levels at the earliest opportunity."

The CBI has pulled together business leaders to form an infrastructure board, headed by Mark Elborne, UK boss of General Electric, to lobby cabinet ministers.

The survey found that half of companies think the UK's transport network has got worse in the last five years, while only 18% say it has improved. Nine out of 10 express concern about the security of energy supply over the next decade.