Governments must resist the temptation to over-regulate in their search for a response to the problems that have created the current financial and economic crisis, warned Laurence Parisot, head of Medef, France's powerful employers' union.

Speaking to the Financial Times ahead of a meeting on Friday of business leaders from the UK, US, Germany and Italy, Ms Parisot warned that a shift away from a liberalised free market could create serious adverse consequences for the global economy.

"History shows that growth comes from free trade, from giving space to people to innovate. We must not weaken our companies. What happened was not the fault of a liberal market, which needs rules. It was an absence of rules (that is to blame)," she said.

Friday's meeting seeks to hammer out a common response to the crisis ahead of the summit on Saturday between European Commission President José Manuel Barroso, Pesident Nicolas Sarkozy of France and President George W Bush of the US.

The business leaders hope to reinforce the message that a recovery from the resulting global slowdown can only be achieved if companies are allowed to flourish. Over regulation or any attempt to increase the tax burden on companies to fund rescue plans would simply exacerbate the adverse economic consequences, said Ms Parisot. "Today we are in recession; perhaps not in an academic sense, but the companies in all our countries are cutting staff, reducing investment and questioning research spending. We are at a very low point in the economic cycle."

The business leaders are also expected to urge governments to ensure that the global banking system does not retreat into a totally risk-averse mentality which could penalise in particular small and medium sized companies. Borrowing costs must remain reasonable, even if it is understandable that they should rise, Ms Parisot said.

"Now that banks have the guarantees, they have to play the game," she said. "They have to do everything to irrigate the economy ... and conditions have to remain acceptable." The governments were right to launch their rescue packages but "it has to be a win win situation."