The Government is building up then destroying markets because of a lack of joined up thinking, the Institute of Directors has warned.
West Midlands regional chairman John Rider blamed the “economics of the madhouse”.
And he praised Business Secretary Vince Cable for highlighting the issue of how best to achieve a connected approach.
Mr Rider said: “This is about growth. It won’t happen if the Government turns on the tap, and then turns it off again. And it won’t happen if Government policy in one area sees the destruction of markets in another as a result of the law of unintended consequences – a euphemism for rank bad planning.
“Business needs certainty and confidence not short-termism and knee-jerk reactions that have an adverse effect on the economy.”
Mr Rider cited three sectors – solar power, wind energy and overseas students.
After years in which solar power has been thriving the Government announced proposed cuts to feed-in tariff payments in October – from 43.3p per kWh of energy generated to 21p.
The move is currently being fought over in the courts but its effect has been to see the number of solar panel installations crash.
“It has brought the industry to its knees,” cautioned Mr Rider.
He fears wind energy could go the same way if the Government caves in to pressure from more than 100 Conservative MPs who have written to the Prime Minister urging him to cut subsidies for turbines.
The Government wants renewable sources, such as wind, to provide 15 per cent of the UK’s energy supply by 2015 albeit it admits that this is “currently more costly” than using fossil fuels, with hundreds of millions of pounds spent on subsidising wind farms each year.
The row has led to some of the world’s biggest wind companies, which have been considering setting up factories, research facilities and other developments in the UK, reviewing their investments.
Mr Rider said: “The sector, which employs thousands of people, must not be de-stabilised. We need a balanced energy policy and we can’t afford to throw all this away.”
But he believes we are in particular cutting off our nose to spite our face on overseas students.
Heavily criticised about levels of immigration, and determined to halt the growth of so-called bogus colleges, the Government has launched a drive to cut their numbers. Yet even Home Office figures have predicted it will cost the country £2.4 billion more than it saves.
Ministers expect 260,000 fewer student visas to be issued to non-EU nationals over the next five years as a result of the changes, saying the action will reduce overall net migration by around 48,000 a year between now and the next General Election.
Mr Rider said: “Once again the Government shoots itself in the foot.
“British universities historically benefit from £2.5 billion in fees from students from outside of the EU – you can double it to £5 billion when you add what these students spend when they are here. Only the US recruits more international students.
“The reputation and quality of our universities helps to draw the brightest and best brains from all round the world. Many of these graduates go on to contribute to our businesses and research institutions. But, regrettably, the changes to visa rules will build on the growing perception that the UK is becoming less welcoming to foreign students.
“Recent headlines like “UK visa rules may force Chinese student exodus” (The China Daily) and “India upset over UK visa rules” (Hindustan Times) illustrate the level of disquiet. In 2010 we attracted 58,000 students from India and some universities are reporting demand down by 40 per cent.
“Do we really want to cut links with tomorrow’s leaders in the fastest growing economies in the world? We should remove students from migration figures – they are temporary residents – like tourists. It seems like the economics of the madhouse to do otherwise.
“We are not doing ourselves any good in the long term. We need joined up thinking which is what Vince Cable has recognised despite the furore his comments have created within the Coalition.”