Businesses have criticised the “command and control” policies at the heart of the Labour party manifesto, which they said would suppress innovation and smother growth.

They hit out at the lack of detail about what the nationalisations set out in the manifesto would cost, while City economists said the annual spending deficit created by the plans would breach the EU’s 3% limit.

Edwin Morgan, director of policy at the Institute of Directors, said most business leaders were on board with the party’s ambitions of tackling the climate crisis and injecting dynamism to all parts of the UK. But he said they were using “too much stick and not enough carrot”.

He said many of Labour’s plans to boost prosperity, through policies such as improving local support for growing enterprises and expanding the apprenticeship levy would sit well with business leaders but that they would have reservations about the party’s “state-first” plans.

The British Chamber of Commerce (BCC) told Labour that a partnership with business was the basis for economic growth and prosperity and its tax and spending plans stood in the way of that.

The BCC’s director general, Adam Marshall, said: “No government can deliver the prosperity that people and public services depend on, or achieve net-zero [carbon emissions], without a true partnership with business. When business thrives, people and communities thrive too.”

He welcomed Labour proposals to improve skills funding, upgrade failing infrastructure and review business rates. “With more firms struggling to recruit, a more open and flexible approach to immigration would also be good news for the economy,” he said.

However, Marshall said: “Command and control isn’t the way. Excessive intervention in business governance and sweeping tax rises would suppress innovation and smother growth.”

Water UK, the lobby group representing water companies, said Labour plans to nationalise the industry were unnecessary after recent improvements in services and inflation-only rises in bills.

Water UK’s chief executive, Michael Roberts, said: “It’s incredible that Labour haven’t even bothered to set out a price for nationalisation. You can’t take over a major industry for free – one way or another, taxpayers and pensioners will have to fund the eye-watering, multibillion-pound cost.”

Labour said in its manifesto that it would increase investment spending using £400bn of borrowed funds and increase day-to-day spending following tax rises on corporations and higher earners. Among its spending commitments are the rollout of free superfast broadband by 2030 and a £75bn fund to build affordable council homes.

Analysts at the consultancy Pantheon Macroeconomics said they expected the government’s annual spending deficit to rise to 2.8% next year under plans put forward by the Tories and 4% under Labour, breaching the EU’s annual deficit level of 3%.

Green groups, including Friends of the Earth, welcomed Labour’s “massive and credible commitment” to overhauling the UK’s energy system by investing heavily in green energy and levelling an £11bn tax blow against North Sea oil producers.

But energy companies criticised the party for embarking on the ambitious plans at the same time as bringing energy network companies and the big six suppliers back into public control by renationalising swathes of the industry.

Audrey Gallacher, a director at Energy UK, said the UK would need significant investment from private markets to secure the investment needed to create a net-zero carbon economy by 2050.

Gallacher said: “Private investment in energy - which was £13.1bn last year – has created a power sector that has been world-leading in decarbonisation while delivering green jobs, boosting economic growth and lowering costs for customers. Now is the time to radically accelerate progress in decarbonising our economy, not do anything that could slow down the progress the sector is making.”

She added that plans to nationalise the big six energy suppliers ignores the huge progress made in recent years to end “rip-off” energy bills and encourage new suppliers into the market.

British Gas, the UK’s biggest energy supplier, said competitive markets were the most effective way to best serve consumers while incentivising innovation, attracting investment and supporting jobs.

A company spokesman said: “The decarbonisation of the energy system is one of the biggest challenges we face and the UK has ambitious targets to reach net zero carbon emissions by 2050. We need to collectively focus our efforts on this goal, rather than undertake costly and time-consuming changes to ownership models.”

SSE, which runs energy networks in Scotland and England, echoed the call for collaboration between business and government.

A spokesman for SSE said: “This is a time for working together now to tackle the climate crisis, not waste years attempting a very costly, complex and controversial nationalisation.”

A spokesperson for the Energy Networks Association trade body said private investment in energy networks has already helped make Britain a superpower of renewable energy and could help it reach its climate targets as quickly and as efficiently as possible.

They added: “Independent research shows that state ownership proposals are likely to lead to delays to decarbonisation, reduced public accountability, disruption to innovation and higher costs to billpayers. Time to reach net zero is running out – let’s not waste it by needlessly scrapping a system that works.”