"Rigid" green rules are threatening Britain's competitiveness in the global economy, a study claimed.

The UK's current green policies are "old mixed with new" with too many rules stifling innovation in business, according to Nottingham University research on the manufacturing sector.

Authors of the study said companies needed more freedom when deciding what techniques to use to comply with environmental goals.

Dr Ramakrishnan Ramanathan said: "We run the risk of businesses being overwhelmed by rigid rules and eventually becoming uncompetitive within the global economy.

"What we need is regulatory design that lets environmental protection coincide with more competitive and innovative manufacturing."

Industrial water treatment was an example of strict ruling, he said.

He added the government was not just setting the figures but also dictating the techniques and technologies companies were to use, "effectively smothering innovation".

Under the current carbon budget, air pollution by 2020 must be 26 per cent lower than in 1990.