THOUSANDS of British companies are cutting economic ties with China en masse, threatening to heap more pressure on the cost of living, the head of the Confederation of British Industry (CBI) has warned, reports London's Financial Times.

CBI director-general Tony Danker said chief executives were increasingly switching business links from China to other countries expecting further deterioration in relations between Beijing and the West.

Mr Danker said the UK would need to find new trade partners and rekindle old ones - for example in the EU - if the West severed its China links.

"If the political experts and security experts are right, we are all going to need to be good friends again," he said.

"Every company that I speak to at the moment is engaged in rethinking their supply chains," he said. "Because they anticipate that our politicians will inevitably accelerate towards a decoupled world from China."