Business has little faith in Government pledges to reform public services, which is affecting recruitment and expansion, according to a new report.
A survey of 400 companies showed most believed efficiency targets would be missed.
The CBI said nine out of 10 firms it polled were unhappy with the reform of public transport and almost as many were frustrated with the NHS and criminal justice system.
Transport and education are ranked as the most important public services to business competitiveness.
Ninety-four per cent of firms cite transport as a key factor and education was cited by 92 per cent.
Firms want these areas to be focused on more than any other over the next five years, with 42 per cent of firms favouring transport reform and 36 per cent education reform as their top priority.
CBI Director General Sir Digby Jones said: "Business as a user of public services depends on good transport, schools and hospitals. But our experience on the ground leaves much to be desired.
"Business expansion is being impeded by poor transport infrastructure, recruitment is being hampered by skills shortages and employees have to wait too long for hospital treatment.
"These are problems that have been building up for decades so it's hardly surprising business has little confidence in the reform process."
Sir Digby said the Government should tackle the "crisis" in the UK's transport system.
Only one per cent were very confident that public service reform would be completed.
Although businesses are more satisfied with the performance of local government in delivering public services than central Government, this is only marginal.
Transport is also seen to have performed poorly at a local level, with 66 per cent of companies dissatisfied with local authorities on this issue. Sixty-two per cent of firms say local government's record on education is unsatisfactory.
Sir Digby Jones said: "The UK government must address the crisis in our transport system. Transport is a key issue on which our economy depends and on which political parties will be judged."