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PBR fails to impress North East

Chancellor Alistair Darling admitted yesterday that the recession was far deeper than he had predicted and announced a public sector pay squeeze to help pay off spiralling national debt.

In his Pre Budget Report Mr Darling laid out plans to slash spending from 2011 - after the General Election - as he admitted the economy would shrink by 4.75% in 2009 compared to his April Budget estimate of 3.5%.

The measures introduced in the report included the raising of all national insurance rates by a further 0.5% from April 2011, a one-off 50% tax on bank bonuses of more than £25,000, a rise in the basic state pension of 2.5% in April 2010, and a new 50p tax on landline phones to pay for superfast broadband.

The chancellor’s measures received a lukewarm response in the North East, with business leaders believing that Mr Darling had taken some positive steps, but that it was just not enough.

James Ramsbotham, chief executive of the North East Chamber of Commerce (NECC), said: “We needed much more than a Bingo Budget to make sure that the economy grows strongly in 2010. Mr Darling announced some good numbers but this was far from a Full House.

“Alistair Darling took the right decision not to end a number of key tax concessions for businesses before the recovery is firmly underway. But, this was very much a ‘borrow now, pay later’ announcement which, while welcome that the Chancellor hasn’t hit businesses with a wave of new taxes, will still leave underlying nervousness about where the money will eventually be found. “NECC will be lobbying the Government strongly to ensure that the Chancellor’s planned ‘efficiencies’ are not in areas that will hamper business growth.”

’Disappointing’

Martin McTague, North East Policy Chairman, for the Federation of Small Businesses (FSB), said:“Extending the Enterprise Finance Guarantee scheme, which we called for last year and has seen more than £600 million lent out to just over 6,000 businesses, is a welcome move, although we wanted to see the scheme extended indefinitely and promoted further to help small firms get much-needed access to finance.

“Raising National Insurance by a half of one per cent in 2011 is an attack on jobs and shows a real lack of vision from the Government on tackling the key challenge of rising unemployment.

“This Pre-Budget Report should have encouraged and rewarded job creation in 2010, rather than imposed this tax.”

Alan Hall, NE Regional Director of EEF, said: “It was a disappointing budget as far as our NE manufacturing businesses are concerned, just at a time when we need a stimulus we have heard little that will encourage further investments.

“The extra support for Teesside is welcome but there again there is a big re-building job to be done.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .