Gordon Brown. Once a handsome suitor. And then it turned ugly

Red tape and tax fears have soured UK plc's love of The Chancellor

Remember 1997 and all that? Gordon Brown - currently preparing not just for tomorrow's pre-Budget report but, eventually, for No 10 itself - surely must. The nation was in joyous mood, as 18 years of Conservative rule came to an end. Yet it wasn't just the man in the street revelling in the downfall of Michael Portillo et al. In an unprecedented break with tradition, business happily ushered in a Labour government.

New Labour had set out to woo business, knowing its mistrust was a barrier to power. Brown promised to slash red tape, bring an end to "boom and bust" economics and make the UK a great place to do business.

At first, all went well. The Bank of England was given independence, meaning the Tories' disastrous attempts to keep the pound in the Exchange Rate Mechanism - which saw interest rates hiked from 10 per cent to 15 per cent in one day, with dire results - would never happen again. New Labour was not out to get business, it loved business - and business believed it.

That, however, was then.

"There's not a very warm feeling left," says one senior director who straddles both the private and public sector. "I can see all of this coming to an end. I also have very serious doubts about Brown becoming Prime Minister - good number twos rarely make good number ones."

One of the biggest gripes business has with Brown is pensions. "People are very hacked off with public sector workers going at 60, and that's not a clever position to get into," says the director. It is a particularly sore point for the private sector, which is battling large pension fund deficits.

"It's looking after your own at the expense of everybody else," says Richard North, former chief executive of InterContinental Hotels. "We're going to be placing an enormous burden on our children, and that's not right."

There is also a belief that while a crisis is looming, Brown is failing to do anything about it. Reports that he is unlikely to accept Adair Turner's recommendations, published last week, are not helping.

"He has a tendency to have too many reviews, too many new things, but not much encouragement or delivery," says one disgruntled fund manager. Coupled with concerns about the Pension Protection Fund levy - which has left some companies, such as Swiss group Nestlé facing bills potentially as high as £12m - and it is little wonder business is so angry.

But it is not the only issue, not by a long shot. One of business's perennial complaints is the level of red tape introduced under Brown - the same politician who pledged to cut regulation in 1997.

The Labour manifesto promised that "we will cut unnecessary red tape" and talked of "new partnerships between government and business". Yet a report by the British Chambers of Commerce this year claimed the cost to businesses of regulation had risen by £40bn since then.

Richard Downs set up his travel business, Iglu, in 1998. Turnover now stands at £35m and the company employs 150 people. But regulation takes up a vast proportion of his day.

"It's just time consuming. When you play by the book, you co-operate, but it just sucks at the time. Where's the fairness in that?" The company regularly faces various audits from different arms of government. "These guys are gods. They have unlimited access to the books and they go through everything."

Mr Downs recalls a hot summer two years ago, when staff where treated to ice lollies. But when the inspectors came, they decreed this was a taxable benefit and billed accordingly.

The City, meanwhile, is also disenchanted with Brown. "He doesn't appear to have much interest in microeconomics and the stock market generally," says the fund manager. "There's a degree of old Labour about him. He doesn't look like a man who's ever owned a share in his life. So it is as if he has decided to provide a stable macro economic background but let the companies sort it out for themselves."

While a lot of new regulation in the City has come from the US and European Union, Brown is still held accountable. "It tends to be over the top and bureaucratic and include all sorts of half-baked initiatives," says the fund manager.

Most believe the next area the Treasury will to turn its attention to is private equity. Brown is thought to want more tax from the sector, which currently pays minimal amounts because of the way deals are structured.

"The private equity community would be understandably concerned if the Treasury were to be casting covetous eyes over their perceived profitability," says Anthony Fry, head of UK investment banking at Lehman Brothers. "Of course, the Treasury looks at things like that - remember the banks and the oil companies in previous governments."

The risk, however, is that the private equity firms simply won't play ball. "They have to be in London, that's where the banks are, but if push came to shove they would simply move - so it isn't going to happen," says Mr Fry.

Other issues include the country's lack of preparation for the harsh winter predicted for this year, and the party's relationship with the unions. The Warwick Agreement, drawn up before the last election and covering rights on strike action, holiday entitlement and redundancy pay, is causing particular concern.

Retailers, which employ 11 per cent of the workforce, have cried foul on the minimum wage and increased maternity leave rights. Some believe Brown could close a loophole tomorrow allowing them to base online operations in Jersey to take advantage of the island's liberal VAT rules. Oil and gas companies also fear the pre-Budget report could herald a windfall tax.

Business has no end of gripes - and not all of them can be laid at Brown's door. "It's too easy for business to moan and groan. It's also too easy to hide behind politics," says the director. "The regulatory burden is challenging, but it's probably been challenging for the last 20 years."

The economy has also fared well under Brown, while the US and Europe suffered. The Chancellor has been true to his word in avoiding a "boom and bust" economy.

"Since 1997, we have delivered consistent low inflation and low interest rates, a flexible labour market, and become one of the most stable economies in the developed world, while cutting rates of income tax, capital gains tax and corporation tax," says a Treasury spokeswoman.

She argues that the Treasury has removed "hundreds of unnecessary regulatory burdens" and created "the climate for 575,000 more businesses to start up".

But there are concerns the economy is softening and, more pertinently, that Brown may be focused on other matters. "He's trying too hard to be the prime minister in waiting," says the director. "And you've got a prime minister that's trying to be a president, so really you haven't got either a chancellor or a prime minister. If it was a stock it'd be a 'sell'."

There are mixed views about the dour Brown becoming Prime Minister. "That's there's going to be a lurch leftwards you can take as given," says Mr Fry. But he believes it will focus on social rather than economic policy.

Others are more pessimistic. "The City is worried," says the fund manager. "He is seen as fundamentally less friendly than Tony Blair, and once he has that power, he's likely to do whatever takes his fancy. He's going to be a more dangerous beast without Blair keeping him in his place."

Much of this is just life: politicians announce policies, business moans and everyone else gets on with it. One person who must be watching with more interest than most, however, is the next Conservative leader. He must be ecstatic to hear so many grumbles and will no doubt set about wooing the City. After all, it worked for Brown.

But the real lesson either David Davis or David Cameron should learn from Brown is not the wooing - it is keeping the relationship going.