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The Confederation of British Industry (CBI) has written to the prime minister to outline its plan to support businesses during the downturn.

Without government intervention, the CBI has warned, healthy firms are at risk of going under.

The organisation has published a ten-point plan outlining the issues facing firms and proposing solutions, including 'unblocking' the flow of credit and cutting business taxes.

Richard Lambert, CBI director-general, said: "The biggest threat hanging over businesses is cash flow.

"If they cannot get their hands on the cash and credit they need to go about their day-to-day business, there is a real risk we could see healthy firms going under."

The CBI is also suggesting the government scrap empty property rates, temporarily freeze business taxes and temporarily reduce employer national insurance contributions.

The alternative approach – seeking to stimulate the economy through personal tax cuts or a reduction in VAT – will not be effective as targeting businesses, the CBI warned.

As unemployment levels soar, consumers will feel obliged to save their cash rather than spend it, dampening demand further.