Budget 1999: Business Reaction - A cautious welcome in the boardrooms

THE BUSINESS community broadly welcomed Gordon Brown's third Budget, praising its focus on enterprise. "Seven out of 10," said Ruth Lea, head of the policy unit at the Institute of Directors. "We're pleased - especially about the measures for small and medium-sized companies."

But executives worried about what the Chancellor did not say, in particular his silence on two crucial problems facing industry - the high pound and the economic sluggishness of the country's key continental European trading partners.

"The Chancellor's Budget was based on an optimistic forecast for the economy going out three years," said Alan Armitage, chief economist of the Engineering Employers' Federation. "If that forecast turns out to be wrong, then everything the Chancellor said would be called into question."

Executives were surprised that the Budget was not fiscally neutral, as predicted, but contained tax cuts worth pounds 4bn. And they worried that the relative looseness of the Budget might hold back the Bank of England in its push to lower interest rates from their current 5.5 per cent level.

"The overall stance of the Chancellor was that it was a prudent give- away Budget," said Ms Lea. "If that's the case it could stop lower interest rates, and that would be bad."

Other executives noted that, despite the focus on enterprise, the Chancellor said nothing about cutting red tape. "We still have to live with the minimum wage," said Ms Lea. "We still have to live with restrictions on the working week imposed by Brussels."

Reaction was divided between big business, small and medium-sized businesses, and bodies representing the country's 4 million self-employed.

Big business was relieved at the absence of new taxes. "Large companies have had to digest tremendous structural change over the past 18 months," said David Cruickshank, London tax partner at accountants Deloitte & Touche. "They will be happy there's a breather."

Small and medium-sized businesses were most upbeat. "I'm very positive," said Mark Dixon, chief executive of Regus, the world's largest operator of business centres. "It seems the Chancellor wants to get the country into high competitive mode. It seems like he's getting the country in the right mode for the new millennium."

The Chancellor's focus on enterprise pleased Jonathan Clarke, a director of venture capital group Cinven and a spokesman for the British Venture Capital Association. "We asked for tax breaks of pounds 250,000 to facilitate moves by executives in major companies to small, high-risk start-ups," he said. "The Chancellor announced tax breaks worth pounds 100,000. Still, that's definitely a step in the right direction."

Even small businesses found much to cheer. "The reduction in the lowest band of business tax from 20 to 10 per cent on profits of less than pounds 50,000 will give a tremendous boost to small retailers, to the corner shop," said Pamela Webber, chief economist of the British Retail Consortium.

The sharpest criticism of the Budget came from representatives of the self-employed. "The Chancellor missed the target," said Ian Handford, chairman of the Federation of Small Businesses.

"The budget for the self-employed was a bit grim. Considering there are 4 million self-employed, and the sector is growing, this was a serious oversight," said Mr Handford.

ebooksAn unforgettable anthology of contemporary reportage
Life and Style

Board creates magnetic field to achieve lift

There have been various incidents of social media users inadvertently flouting the law

Life and Style
Stack ‘em high?: quantity doesn’t always trump quality, as Friends of the Earth can testify
techThe proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Bourgogne wine maker Laboure-Roi vice president Thibault Garin (L) offers the company's 2013 Beaujolais Nouveau wine to the guest in the wine spa at the Hakone Yunessun spa resort facilities in Hakone town, Kanagawa prefecture, some 100-kilometre west of Tokyo
CSKA Moscow celebrate after equalising with a late penalty
footballCSKA Moscow 2 Manchester City 2: Premier League champions let two goal lead slip in Russia
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultants

£20000 - £25000 per annum + OTE £Competitive: SThree: SThree Group and have be...

Helpdesk Analyst

£23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...

Senior Helpdesk Analyst / Service Desk Co-ordinator

£27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...

Senior Pensions Administrator

£23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...

Day In a Page

Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Ed Sheeran hits back after being labelled too boring to headline festivals

'You need me, I don’t need you'

Ed Sheeran hits back after being labelled too boring to headline festivals
How to Get Away with Murder: Shonda Rhimes reinvents the legal drama

How to Get Away with Murder

Shonda Rhimes reinvents the legal drama
A cup of tea is every worker's right

Hard to swallow

Three hospitals in Leicester have banned their staff from drinking tea and coffee in public areas. Christopher Hirst explains why he thinks that a cuppa is every worker's right
Which animals are nearly extinct?

Which animals are nearly extinct?

Conservationists in Kenya are in mourning after the death of a white northern rhino, which has left the species with a single male. These are the other species on the brink
12 best children's shoes

Perfect for leaf-kicking: 12 best children's shoes

Find footwear perfect to keep kids' feet protected this autumn
Anderlecht vs Arsenal: Gunners' ray of light Aaron Ramsey shines again

Arsenal’s ray of light ready to shine again

Aaron Ramsey’s injury record has prompted a club investigation. For now, the midfielder is just happy to be fit to face Anderlecht in the Champions League
Comment: David Moyes' show of sensitivity thrown back in his face by former Manchester United manager Sir Alex Ferguson

Moyes’ show of sensitivity thrown back in his face... by Ferguson

Manchester United legend tramples on successor who resisted criticising his inheritance
Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Ranked seventh in world’s best tourist cities - not London, or Edinburgh, but Salisbury

Lonely Planet’s Best in Travel 2015

UK city beats Vienna, Paris and New York to be ranked seventh in world’s best tourist destinations - but it's not London