Farnborough Air Show: Sir Richard Branson Talks Heathrow's Immigration Issues, Virgin Atlantic

Britain's economy will fall behind the rest of Europe unless London's capacity-constrained Heathrow hub gets a third runway and the government improves immigration services, serial entrepreneur and Virgin Atlantic founder Richard Branson said.

"There should have been a third runway at Heathrow in the 1940s and only two got built," Branson told Reuters in an interview. "Meanwhile, in France, Germany and Italy about 24 new runways have been built and, as a result, Britain is being held back."

BAA's Heathrow is operating at full capacity after Britain's Conservative-led coalition government blocked development of a third runway when it came to power in 2010 as further expansion of the west London site would mean a huge increase in the number of planes flying directly over the capital. There were 476,197 flights at Heathrow in 2011, representing 99.2 percent of the airport's limit.

Heathrow is falling behind rival European airports in Paris, Frankfurt and Amsterdam in the battle for lucrative routes to the Far East because of the constraints on growth.

Branson said a lack of space at the London hub was stopping Virgin Atlantic competing with IAG's British Airways domestically and on routes to emerging markets.

Read more: Farnborough Air Show: Sir Richard Branson Talks Heathrow's Immigration Issues, Virgin Atlantic