Business chiefs are lukewarm

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The Independent Online
THE CHANCELLOR'S Budget for recovery received a lukewarm response from the big battalions of British business last night with even the Government's natural allies questioning the hefty tax increases planned for next year, writes Michael Harrison.

The Confederation of British Industry praised Norman Lamont for sticking closely to its own Budget submission but criticised the absence of fresh incentives for manufacturing and the 'sting in the tail' of future tax increases.

Howard Davies, director-general of the CBI, said: 'This is close to the Budget we asked for, but we would have liked an assurance on the continuation of improved investment allowances.'

However, the Engineering Employers Federation was more direct in its criticism. Its director general, Neil Johnson, said: 'This is a disappointing Budget because it fails to address the critical need to stimulate investment in the UK manufacturing base and infrastructure.

The Institute of Directors said the Budget measures 'should not damage economic recovery' and welcomed the freeze in the uniform business rate.

But Peter Morgan, IoD director-general, said he was 'alarmed' at the tax increases planned for next April. 'In this Budget, the Chancellor has lost the opportunity to dismantle the archaic system of capital taxes which drain the private sector of much-needed equity,' he added.

Richard Brown, Policy Director at the British Chambers of Commerce said: 'We asked for a Budget which did not upset the fragile recovery, but addressed the urgent need to boost exports and press on with deregulation. This is what we have heard today.'

The Building Employers Confederation weclomed the announcement of big construction projects such as the Heathrow express and the Channel tunnel rail link and the doubling of the stamp duty threshold on house sales to pounds 60,000.

But Sir Brian Hill, its president, indicated that the Chancellor had wrongly assumed that economic recovery was well under way and could be sustained.

'In construction, the recovery is still very limited and fragile,' he said.

'It is important, therefore, that the Budget paves the way for a further cut in interest rates as soon as possible.'

Norman Willis, TUC general secretary, said: 'The Budget does nothing to stop unemployment rising by a further half million this year. Yet all he offers the unemployed are derisory schemes that will offer small help to 100,000.'