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Budget 2001 Wednesday, 7 March, 2001, 18:51 GMT
Business praise for Budget
UK businesses have cautiously praised Chancellor Gordon Brown's pre-election Budget.

The Confederation of British industry (CBI) has welcomed the "balanced budget," saying that it will not upset the UK's macroeconomic stability.

The Chancellor has cleared the way for the Bank to cut interest rates again tomorrow

John Monks
Trade Unions Congress
Industry is relieved that the budget has not reduced the chance of interest rate cuts, in order to boost the economy.

Many businesses had feared that big give-aways would push inflation higher and discourage the Bank of England from further interest rate cuts.

On Wednesday, the British Chamber of Commerce (BCC), the CBI and the Trade Unions Congress (TUC) all said that the budget should leave the Bank of England in a position to continue the downward trend on interest rates.

However, some industry figures say more could have been done to help big business.

The Bank is due to announce its decision on the future level of interest rates at 1200 GMT on Thursday.

Small business gains

The CBI also said that the change in VAT for smaller business "was exactly what we've been asking for," and said that they welcome and will participate in tax credits for employers undergoing training programmes.

The changes in VAT are exactly what we've been asking for

The BCC also noted that smaller business were favoured over the larger firms.

"The measures announced for business bring particular benefits to small firms," said Anthony Goldstone, President of the British Chambers of Commerce.

John Monks, the general secretary of the Trade Unions Congress, was among those who praised the budget.

"All in all a pretty responsible budget," Mr Monks told the BBC.

But initial reaction from the city suggested that some big businesses were disappointed that there was only a consultation on research and development, not the instant tax credit that pharmaceutical companies will enjoy.

And observers commented that, while the budget concentrated on family and children, there were few specific measures which targeted the UK's big businesses.


But shortly after the budget, there was also a series of criticisms about the effects on business of specific items in the budget.

The CBI complained that the budget did not reform the Climate Change Levy, calling this "the fly in the ointment".

Areas of criticism here
Climate Change Levy
Paternity leave
stamp duty on share transfers
IR 35 tax
The CBI says that the Climate Change Levy - the UK's tax on the production of environmentally damaging gases - is "seriously damaging UK competitiveness."

And the confederation also commented that Mr Brown refuses to address the level of stamp duty on share transfers which "damage the City of London's standing as the world's financial capital."

The Professional Contractors Group (PCG) were disappointed that the Chancellor did not repeal the so-called IR35 tax rules which treat contractors, for example computing and engineering specialists, like company employees.

The PCG maintains that this tax sends small businesses overseas.

"There is little point in the Chancellor making token gestures towards small businesses whem many of those small businesses will have either closed down or moved overseas," said PCG chairman Gareth Williams.

All in all a pretty responsible budget

John Monks
The TUC was disappointed that the increase in maternity benefit leave is to be staged, and that the Chancellor stopped short of adding an earnings-related benefit for new mothers.

The BCC said that paid paternity leave had the potential to be a "significant dead-weight cost".

Stock markets were cautious of knee-jerk reactions to the budget, and displayed no great changes in either direction.

The FTSE ended the day down just 11.2 points at 6000.8 points, when the London Stock Exchange closed shortly after Mr Brown sat down.

But shares in drinks and tobacco companies were boosted by the lower-than-expected increases in duties.

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