Business reaction: We're anxious about Darling's deficit plans, says CBI

Business leaders echoed the City's worries about Britain's finances last night, expressing concern about the lack of detail in the Chancellor's plans to close the bulging budget deficit.

Richard Lambert, director general of the Confederation of British Industry (CBI), said that with the election just weeks away, Alistair Darling had delivered a "clever, political Budget", but had left business anxious about "how the deficit is going to be paid down". Mr Lambert also questioned the Chancellor's growth forecasts for 2011 and beyond, saying they were "still on the optimistic side". The British Retail Consortium (BRC) also took the view that while Mr Darling had made "a modest start" in outlining his plans, the Budget was thin on specifics. "The Chancellor offered no reassurance that he understands spending cuts must be the key means to tackling the deficit and not tax rises, which will wreck recovery," the BRC's director general, Stephen Robertson, said. The lack of detail was "damaging demand", Mr Robertson added, remarking: "This was the Chancellor's opportunity to remove some uncertainty but, so far, he has left too many blanks."

David Frost, director general of the British Chambers of Commerce, also said that Mr Darling "could have done more" to clarify his plans on the deficit, while Miles Templeman of the Institute of Directors hit back against the argument that early cuts would jeopardise the recovery. "We remain convinced that swift action to tackle the budget deficit is needed," Mr Templeman said, adding: "We believe that lower spending would have triggered a whole series of positive developments to assist growth."

Beyond the lack of detail on the deficit front, the BRC was incensed by the 2.2 per cent increase in the adult minimum wage, which will rise from £5.80 per hour to £5.93 per hour in October. The hike, which was omitted from the Budget speech and came to light in the documents released thereafter, was "downright irresponsible", Mr Robertson said, adding: "How can an increase [that is] virtually double last year's be justified? Economic conditions were far weaker in the run-up to this year's decision than 12 months earlier." The BRC's concerns were countered by the Food and Drink Federation, which said the move struck "a fair balance between the needs of lower-paid workers and hard-pressed employers recovering from recession".

Of the other measures unveiled yesterday, the CBI was pleasantly surprised by the support for businesses, welcoming "modest but helpful changes" such as the increase in the capital gains tax relief for entrepreneurs. The £270m earmarked to fund university places in science, technology and maths also received a warm reception, with Mr Lambert saying the money, which will come in part from the tax on bank bonuses, "will be welcomed by industry".

The establishment of a green investment bank, which will be partly funded by the sale of assets such as the Channel Tunnel rail link, was seen as a step in the right direction by the Association for Consultancy and Engineering, which speaks for some 800 firms in the consultancy and engineering sectors, while the Chartered Institute of Personnel and Development (CIPD) endorsed the Chancellor's moves to counter youth employment.

The CIPD did, however, call for action for the over-50s. "We've warned for some time that, although the over-50s are losing their jobs in lower numbers than younger workers, they are struggling to get back into work where they do fall out," the CIPD's chief economic adviser, John Philpott, said.