Business organisations gave George Osborne cautious thumbs-up for a "credible plan" to help companies grow and for sticking with his "Plan A" deficit-reduction programme yesterday, despite lower forecasts for the UK economy limiting his room for manoeuvre.
While unions warned of "permanent austerity", business groups generally welcomed the Chancellor's initiatives, which included a £20bn credit-easing package for small and medium-sized firms as well as measures to cut youth unemployment.
Angela Knight, chief of the British Bankers' Association, said: "With the eurozone crisis putting lack of confidence top of the list of concerns in every comprehensive survey of business, this statement makes it clear money is available for viable businesses."
She said businesses are currently borrowing about £664bn from the UK's high street banks.
John Cridland, director-general of the Confederation of British Industry, called the Chancellor's statement "Plan A-plus in all but name".
He added: "The Government's dogged commitment to budget deficit reduction remains the only way to maintain the UK's triple-A credit rating and low interest rates on international money markets."
However, Mr Osborne has slashed his growth forecast to just 0.9 per cent this year, down from a 1.7 per cent prediction in March, while output is set to fall to 0.7 per cent next year, compared with the earlier 2.5 per cent forecast.
More specifically, the CBI and British Chambers of Commerce were particularly bullish about the National Infrastructure Plan, which aims to leverage private sector investment for 35 new projects.
John Longworth, BCC director-general, said: "For too long the UK dithered on infrastructure while other countries forged ahead, putting in place new rail, air, digital and energy networks."
But the British Retail Consortium was more lukewarm in its praise. Stephen Robertson, its director-general, said deferring the fuel duty rise of 3 per cent planned for January to August was "welcome" for retailers.
But he said the Chancellor had stopped short of "implementing a significantly lower increase" in business rates.
The CBI described the three-year Youth Contract scheme – which will give employers subsidies worth £2,275 to take on 160,000 18 to 24-year-olds for six months – as "excellent news for young people".
But Brendan Barber, TUC general secretary, attacked Mr Osborne's plans. "The Chancellor's stubborn determination to stick to his 'Plan A' despite the evidence it's not working and won't work in the future means we're locked into permanent austerity," he said.
Case study: 'It's not the cost of the loan but the availability'
John Twitchen, 37, runs Sauce, an environmental consultantcy based in London
"When you scrape the surface, there's not really much difference to things that have been talked about before by previous chancellors," he complains. "The Small Firms Loan Guarantee Fund didn't work for us previously. A cheaper rate of loan, though it might reduce the cost, won't change the terms on which a small business could get a loan. The sticking point really, is the banks. The rate of loans is not the problem, it's the availability. Nothing I see or hear today has changed the ability for us as a small business to access significant loan support."
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