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10 December 2009 Pre-Budget Report: the business reaction

UK business groups have given a mixed reaction to the Pre-Budget Report announcements.

The Federation of Small Businesses has welcomed the deferral of the planned 1% rise in corporation tax for small firms, together with the extension of the Enterprise Finance Guarantee fund.

However, the organisation expressed disappointment over plans to increase employer and employee national insurance contributions (NICs) by a further 0.5% from April 2011, describing this as 'an attack on jobs' and arguing that the Government had missed an opportunity to encourage and reward job creation.

Meanwhile, the Confederation of British Industry has also attacked the additional rise in NICs, which it described was a 'serious mistake', which comes at a time when economic recovery remains fragile.

The British Chambers of Commerce (BCC) has echoed these concerns. David Frost, BCC Director General, said, 'While everyone understands the importance of restoring the public finances to a sustainable path, a tax on jobs is not the way to do it'.

Mr Lambert also lamented the lack of clear information regarding how the Government intends to reduce public expenditure, and warned that the new 50% tax on bankers’ bonuses could lead to an 'exodus of talent', although he welcomed the announcement of a 1% pay freeze for public sector workers.