It would be “madness” for Alistair Darling to press ahead with proposals to impose an increased tax on aviation in the pre-Budget report in spite of the impact of the recession, business has warned.

The lobbying of the government coincides with signs the chancellor is set to retreat on the proposed duty, which has been criticised by the US government and business groups, as well as airlines. The Treasury told the Financial Times on Thursday it was aware of the concerns raised and the “need to take account of the current economic circumstances”.