Britain's growth strategy of tax cuts and deregulation will not provide a fast track to economic prosperity and needs to be reassessed, according to a government-commissioned review published on Wednesday.
Lord Heseltine, the former Conservative Party deputy prime minister, warned in his six-month study on the government's economic policy that "continuing as we are is not an acceptable option."
Heseltine, who was asked to write a sweeping economic review by the government, called for a "war psychology" to overcome the economic crisis and urged for an end to ministerial uncertainty on crucial issues such as energy and aviation because "the world will not stand still — and nor must we".
However, despite cutting remarks into every aspect of Britain's low growth, the report was welcomed by the government.
"I wanted Lord Heseltine to do what he does best: challenge received wisdom and give us ideas on how to bring government and industry together. He has done exactly that. This is a report bursting with ideas and we will study it very carefully," Chancellor George Osborne said.
In the 228-page report, entitled No Stone Unturned, Heseltine makes 89 recommendations, including the need to strengthen controls on foreign takeovers to block deals deemed unfavourable to Britain.
Ministers only intervene in foreign takeovers in cases that may affect national security or when media companies are involved.
Mergers are formally assessed if the company being taken over has an annual turnover of 70 million pounds or more, or if the new entity would control 25 percent or more of its market.
If not an issue of national security, the assessment is largely seen through the interests of the consumer as opposed to the wider strategic needs of British industry.
"I reject the notion that regulation in itself hinders growth. Good, well designed, regulation can stop the abuse of market power and improve the way markets work to the benefit of business employees and consumers," Heseltine wrote in the report.
He avoided criticising ministers directly, but said that "it takes too long for decisions to be made" by the government and the message amongst Britons is "that the UK does not have a strategy for growth and wealth creation".
The report challenges government policy on a vast range of specific issues such as immigration, ways to boost infrastructure spending and the lack of a decision on where to build a four runway airport around London.
"The review raises a number of important issues that impact on the government's ability to interact effectively with business throughout the country," business minister Vince Cable said.
"Lord Heseltine's findings show where government can improve its performance in delivering better interventions. We will now need time to consider its numerous recommendations and will respond in the coming months."
(Reporting by Stephen Mangan; Editing by Stacey Joyce)