Business leaders believe the Government's reforms on issues including reducing tax and red tape, and simplifying employment law, have been "ineffective", according to a new study.
Research among more than 1,200 members of the Institute of Directors (IoD) also found "serious concerns" that the recession will continue for the rest of the year.
The directors said the coalition had struggled most at reducing tax complexity and business regulation.
Just over half of those polled predicted economic growth to be lower this year, while two out of three said there was a zero or low probability of the UK emerging from recession in 2012.
Graeme Leach, chief economist at the IoD, said: "Business is battening down the hatches in the expectation that the recession will continue for the rest of the year. That is bad news for the economy at large, because decisions to invest money or take on more staff are being postponed until things look up.
"Low confidence leads to delayed decisions, and delayed decisions further undermine economic confidence - it's a vicious cycle.
"At the same time, the Government's reform agenda is pointing in broadly the right direction, but the overwhelming opinion of our members is that they are doing too little, too slowly.
If the coalition wants to break this cycle of low economic confidence, then they need to take some bold steps that will make a real difference to the cost and complexity of doing business in the UK."
Labour's shadow business secretary Chuka Umunna said: "Month after month the country's businesses have been telling the Government it is not doing enough to lift our economy out of this double-dip recession created in Downing Street.
"But out-of-touch and ineffective ministers refuse to listen, which is why they are losing the confidence of business.
"The IoD is right to point out that 'low confidence leads to delayed decisions'. In order to have the confidence to invest, business needs far more certainty from Government, but what they have got on policy - from aviation to renewable energy - is indecision.
"Instead of implementing a proper plan for growth and the active industrial strategies to get our economy going again which Labour has been calling for, out-of-touch ministers press on with the same failed policies, accusing businesses of 'whinging' and needing to 'work harder' when it is the Government which is the problem."
A Government spokesman said: "We have set out a comprehensive strategy to achieve strong, sustainable and balanced growth, including important reforms to reduce the burden of regulation.
"Since 2011, savings to business from cuts in regulation have outweighed the costs of new domestic regulation by more than £850 million, and a root and branch reform of labour laws has already led to an increase in the qualification period for unfair dismissal and reform of employment tribunals.
"The Government has clearly demonstrated a commitment to simplifying the tax system."