Businesses are concerned about how a hung parliament will affect their operations, a new survey has revealed.

The potential impact of a hung parliament is a cause for concern for nearly two thirds of businesses (65 per cent) recruitment consultants planning to outsource back office solutions may want to know.

More than half (54 per cent) of respondents to the British Chambers of Commerce's (BCC) latest Monthly Business Survey also revealed that they expected VAT to be increased after the elections.

According to the BCC, whose poll also revealed that companies expect a rise in excise duties and income tax, this suggests that businesses are already creating provisions for a VAT rise in their financial planning.

"Businesses are right to be wary about the prospect of a hung parliament," said David Frost, director general of the BCC.

"Whatever the outcome of the election, whether we have a coalition government or not, we must see a credible plan to reduce the deficit and restore confidence within 90 days."

The Institute of Directors recently called on the government to cut red tape as it is costing UK companies billions annually.