Chancellor George Osborne must focus on youth employment and training in next month's Budget to avoid the prospect of a "lost generation", according to a leading business group.

The British Chambers of Commerce (BCC) today sets out a series of proposals which it says at less than £400 million will take up just a fraction of Government spending.

It says growing jobs, improving skills and encouraging enterprise among young people are crucial to securing future growth.

The BCC said it was responding to employers' concerns about the "work readiness" of young people and a "deficient" education system.

It cited latest figures showing that, while youth unemployment has fallen, it stands at 917,000, meaning young people were three times as likely to be out of work as the rest of the UK population.

In a submission to Mr Osborne, the body is proposing measures including increasing tax reliefs for those investing in companies run by young entrepreneurs - who often struggle to obtain finance from other sources such as banks.

Proposals also include a £100 million future workforce grant scheme to give £1,000 payments to firms hiring long-term unemployed people or a new apprentice, to create 100,000 new jobs this year.

The organisation is also calling for a two-year extension to a successful scheme giving apprenticeship grants to employers, to help create 80,000 additional apprenticeships.

BCC director general John Longworth said: "Businesses across Britain tell me they want to hire young people.

"Yet many cannot afford to take the risk, especially at a time when other, more qualified applicants are coming forward for the job vacancies on offer.

"If the Chancellor wants to avoid a lost generation among today's 16 to 24-year-olds, he must use the spring Budget to help businesses take on and train up young people, whether they are going straight into jobs or into apprenticeships.

"He should also extend tax incentives for individuals with deep pockets who invest in businesses started up by school and college leavers and graduates.

"Getting young people into employment is vital, pressing, and easily affordable right now.

"Helping British youth in the way we propose would cost less than 7% of what the Government spent on overseas aid last year, for example."