Business leaders have hit back after the business minister dismissed their concerns over the negative impact of European Union bureaucratic red tape.

Speaking at a recent conference organised by Business for New Europe held in the City, Baroness Vadera argued that smaller companies are not being placed at a competitive disadvantage by the government's policy of vigorously implementing - or 'gold-plating - Brussels legislation.

"We have a mythology that the UK gold-plates European legislation," she said.

"We had a study and, lo and behold, the UK does not gold-plate."

However, this claim was refuted by the former president of the British Chambers of Commerce, Isabelle Moore, who stated that this was "absolutely not true", an argument supported by a number of other business leaders, many of whom feel the government is out-of-touch with industry thinking.

"Ministers have to be aware and have an understanding of business concerns and certainly our members do believe, when they look at their European competitors, that there is gold-plating here," David Frost, BCC director-general told the Financial Times.

Baroness Vadera also refused to pledge a relaxation on restrictions currently imposed on migrant workers from Romania and Bulgaria ahead of a review of the legislation later this year.