Business reaction: Bosses give a guarded welcome

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The Independent Online

Business groups greeted the pre-Budget report with a cautious welcome last night, adopting a "wait and see" attitude in light of the ensuing economic slowdown.

The CBI's director general, Richard Lambert, said that while the report contained a number of measures that businesses had asked for, "only time will tell" whether the reduction in VAT has any significant impact on consumer spending. "The Chancellor's growth forecasts depend on his success in stimulating consumer spending and otherwise look optimistic. On them also depends his forecasts for the budget deficit," he added.

The British Retail Consortium also tempered its praise. "Businesses require certainty. It makes me nervous that the Chancellor has announced several major changes which are only temporary but these are unusual times," said Stephen Robertson, BRC director general.

Calling the VAT reduction "a modest but welcome boost for households", Mr Robertson added that implementing the new 15 per cent rate in a week will be "exceptionally difficult".

The stock market adopted a different tack with retail shares rising on hopes that consumers will heed the Chancellor's call to loosen their purse strings. The FTSE 100 rose by 10 per cent – its biggest single day gain on record.