Business leaders have urged the Government to take immediate action amid fears that Brexit was in danger of “spinning out of control”, paralysing British industry and dealing a devastating blow to the economy.

They also demanded ministers protect “thousands of valued European employees” fearing for their futures in a Britain outside Europe.

The alarm was raised as the Government’s strategy for Brexit sat in tatters after the High Court ruling that Theresa May cannot trigger Article 50 of the Lisbon Treaty, starting the process of leaving the European Union, without first consulting Parliament. Businesses said they were putting investment decisions on hold, delaying expansion plans and holding off on hiring new staff in response to the decision.

Sir Martin Sorrell, chief executive and founder of advertising giant WPP, said the court ruling could be the prelude to yet more uncertainty amid a deepening crisis. “The High Court ruling is just one example of how much we underestimate the complexity of Brexit, and the barriers to it happening swiftly or in an orderly fashion,” he told The Independent.

“In one respect a welcome ‘Brexit check’, parliamentary scrutiny also means delay and adds to the climate of uncertainty that is causing businesses to postpone or cancel investment decisions. It all makes life more difficult.”

Sir Martin, named the second best performing CEO in the world by the Harvard Business Review, warned earlier this week that his company had seen the first signs of “Brexit anxiety” in the UK.

Meanwhile, the Co-operative Group said it was gravely concerned about the impact of Brexit on staff, particularly its European employees. Chief executive Richard Pennycook said their rights must be protected.

“Uncertainty will be felt most by those EU citizens living in the UK, and indeed ours living elsewhere in the EU,” he said. “In the Co-op, we have many thousands of valued colleagues who find themselves in this position. The free movement of people remains a key area of focus between our Government and other member states, and we would urge, despite the ruling, that the negotiators draw a distinction, rapidly, between those already here and those who may wish to come in the future.”

Patric Johnson, managing director of City broker Panmure Gordon, said he was worried about the impact on smaller businesses, which make up a large proportion of his client base: “The judgment by the Law Lords from a business and growth perspective was most unwelcome, as it could delay the decision for triggering Article 50 by the end of March, 2017.

High court rules Brexit needs Parliamentary approval

“Many of Panmure Gordon's clients are small and medium sized enterprises (SMEs). These companies probably contribute more to growth than other sector in the UK. Consequently I urge the PM to be mindful of the need to push on with her plans as quickly as possible.”

Mr Johnson said he believed “an immediate general election” might be required to “deliver a speedy answer to this thorny problem”.

Business groups said ministers had to start listening to their concerns. Privately there is frustration that lines of communication have been interrupted or severed by the turmoil created by the result of the EU referendum.

One MP told The Independent: “You can understand the frustration. At the moment they’re talking to everyone but no one’s really sure where the real power lies.”

Terry Scuoler, chief executive of consultancy group EEF, the manifacturers’ organisation, said: “Whatever the constitutional position as advised by the courts, the Government must do all it can to manage a stable process in the meantime and ensure businesses can be confident about the rigour of the preparations for Brexit negotiations.

“That involves listening to industry and continuing to gather evidence about the detailed implications of each set of options before attempting to firm-up decisions such as membership of the customs union and our relationship with the single market.

“Ministers will also need to move quickly to reassure investors who are watching every move very closely. The Government cannot afford to let the whole issue appear to spin out of control.”

Chris Southworth, secretary general of the International Chamber of Commerce UK said: “The global economy is facing serious challenges, with under 3 per cent growth for the fifth consecutive year and protectionism up 40 per cent in 2015. Brexit has added more complexity and uncertainty which is a major concern for businesses both in the UK and overseas.

“There is a lot at stake in the negotiations with the EU. It is an excellent opportunity for business leaders to bring a more pragmatic approach to the table and highlight that free trade really matters, especially for SMEs and jobs in the regions. UK policymakers must listen to what businesses need. Government can and should give assurances on transitional arrangements being put in place in the event of overshooting the two year EU exit timeframe. This would significantly help to settle nerves.”

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Rain Newton-Smith, chief economist of the Confederation of British Industry, said: “The process for triggering Article 50 is a constitutional matter for the courts, Government and the UK parliament. Business will want clarity on the Government’s negotiating position before the process begins and will work in close partnership to help ensure an outcome which delivers prosperity for the UK.”

Union leaders, meanwhile, continued to demand reassurances on the issue of workers rights.

Trades Union Congress general secretary Frances O’Grady said: “Working people need to know that the Prime Minister’s promise to protect their rights will be delivered in the Brexit agreement.

“A commitment to comply with existing and future EU workers’ rights must be at the heart of any transitional agreement, and of any future UK-EU trade treaty.