Budget Reaction: Business left feeling sceptical and disappointed

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The Independent Online

With the Chancellor having little scope to dole out sweeteners ahead of next year's election Alistair Darling's speech received a largely frosty reception from leading business figures.

Richard Lambert, the director general of the CBI, said the Chancellor's Budget had failed to set out a "credible and rigorous path" for restoring the public finances to health. He said that the Chancellor's economic forecasts for next year and beyond looked optimistic.

"By pushing out the horizon for balancing the books as far as 2018 the Government is running too much of a risk."

Simon Walker, the chief executive of the BVCA, which represents the private equity industry, claimed the Budget would severely undermine Britain's status as a world financial centre.

"The income tax rises which he has announced effectively end Britain's competitiveness in taxation and will discourage investors from being located and doing business here," he said.

Miles Templeman, the director general of the Institute of Directors, said that the increase in the top rate of income tax to 50 per cent sent out all the wrong signals.

"The hike will affect very few of our members but it will have a damaging impact on the wider economy and undermine the UK's attractiveness as a place to invest," he said.

"We are also worried about the slippery slope whereby the 50 per cent rate becomes payable on successively lower incomes in the future."

Stephen Hadrill, the director general of the influential Association of British Insurers, said the Budget was something of a "mixed bag".

"We are pleased the Government has accepted our arguments on foreign profits and the need to raise ISA limits substantially," he said. "But this is a disappointing day for pension saving. The decision to curtail tax relief, while only affecting a minority of pension savers, sends an alarming message that pension promises can be easily broken."

Lucy Neville-Rolfe, the director of corporate and legal affairs at Tesco, which unveiled annual profits of more than £3bn this week, said: "We think the Chancellor missed a real opportunity to introduce green rates that would encourage more efficient use of energy across the country.

"But we welcome the measures put forward in the Budget to help the long-term unemployed and also measures announced on climate change."