Swift investment across Britain's road and rail networks, digital, waste and energy would ensure we remain internationally competitive and kick-start UK growth.
The survey of 477 businesses found 58% rate the UK's infrastructure worse than other EU countries, when judged on quality, value for money and reliability. And worryingly, just 26% of firms saw the UK as a favourable destination for infrastructure investment.
Last year's World Economic Forum Global Competitiveness Report placed the UK 33rd for quality of infrastructure, alongside Slovenia and behind Tunisia and Cyprus*. But competitors France and Germany both made the top ten.
The CBI is calling for swift action to help secure critical business investment and urges the Government to raise its capital investment to pre-recession levels as soon as possible.
John Cridland, CBI director general, said: "This survey paints a disturbing picture. Firms across the country say that the infrastructure they depend on every working day is just not good enough and is stifling growth.
"High quality infrastructure swings boardroom decisions when companies are looking where to invest, and pays dividends in terms of future jobs and growth.
"The UK is still a long way down the international infrastructure league table and languishes behind key competitors. So, if we are serious about boosting exports - especially in emerging markets - and achieving sustainable growth, the Government must put infrastructure investment firmly at the top of its agenda.
"We need ministerial decisions that get spades in the ground and people working now. There are large amounts of business capital waiting to be unlocked if the Government achieves a step-change on transport, for example with the introduction of road tolls. Capital investment must return to pre-recession levels at the earliest opportunity."
Today's report, called Making the right connections: CBI/KPMG infrastructure survey 2011, assesses the state of the UK's infrastructure and highlights how critical quality infrastructure is to companies' decisions about where to invest and their ability to compete.
Half of companies think the UK's transport network has got worse in the last five years, while less than a fifth (18%) say it has got better. Nine in ten express concern about the security of energy supply over the next ten years.
The link to sustained economic recovery is clear, as the survey shows, most companies rank the quality and reliability of energy (81%) and transport (81%) infrastructure as significant or very significant to future investment decisions.
The Government's own National Infrastructure Plan acknowledges that £200bn of infrastructure investment is needed in the next five years alone, with 70% expected to come from the private sector.
Four-fifths (79%) of firms are satisfied with links to EU markets, but they are far less happy with links to emerging markets, such as the Far East and South America. Just 59% think the UK's links to these countries are satisfactory, while a full two-fifths (41%) are dissatisfied.
Two-thirds of businesses (65%) said Britain's local road network has deteriorated in the past five years.
Commuter rail also got a 'thumbs down' from firms, with nearly half (46%) feeling it has worsened and just 22% seeing improvement.