A cautious welcome despite concerns over stamp duty on commercial leases

Business and industry gave a cautious welcome to the Budget, though there were concerns in the City that the Chancellor had been overly optimistic with his economic growth forecasts.

On the stock market the FTSE100 index of leading shares barely budged, with events in Baghdad proving more compelling.

The Confederation of British Industry (CBI), Britain's leading business organisation, gave the Chancellor the thumbs-up. Digby Jones, its director general, said: "In a difficult business climate and with little room for manoeuvre, he has turned to more creative ways for improving the overall performance of the economy ... He has resisted the temptation to slap more taxes on business, which would have delivered a serious blow to confidence."

But the CBI said the plan to introduce stamp duty on commercial leasehold property could be "devastating for some high street businesses".

The British Chambers of Commerce was positive, saying the small business measures were good news. But David Frost, the director general, said: "The rise in national insurance contributions this week took away much more than the Chancellor has given."

Brendan Barber, TUC general secretary-elect, said: "This was a sensible, 'steady as she goes' Budget, with no great fireworks but many useful changes that will boost skills, tackle poverty and help regions. The Chancellor has held his nerve. He was right to face down those critics who said he should cut spending."

The Engineering Employers' Confederation, however, was more critical. Martin Temple, its director general, said: "Manufacturers had low expectations from this Budget and were not surprised by the result. The Chancellor has missed his opportunity to give a much-needed boost to manufacturing investment."

The Federation of Small Businesses said the Budget was "uninspiring". John Walker, policy chairman, said: "Freezing taxes is not good enough. It doesn't freeze the tax take, it simply means that inflation does the Chancellor's job for him."

The UK Offshore Operators Association said a plan to stop the petroleum revenue tax (PRT) tax from next year was encouraging news for the oil industry. "Abolishing PRT on new tariff business could, by encouraging lower tariffs, potentially unlock a further 500 million to 700 million barrels of oil equivalent from the development of currently uneconomic North Sea discoveries," it said. This could represent new capital investment in the region of $3bn (£1.9bn) to $4bn.

There was relief for the airline industry with a freeze in air passenger duty. Housebuilders also escaped when rumours of a possible increase in stamp duty on more expensive homes proved wide of the mark.

In the City the principal concern was over Mr Brown's economic forecasts. Deanne Julius, a former member of the Bank of England's Monetary Policy Committee, said: "He is placing his hopes on a quick recovery this year and next, but if that does not happen we will see a ballooning deficit in the coming years."

Others took heart from the Chancellor's optimism. Hilary Cook at Barclays Stockbrokers said: "He is pretty confident the economy will bounce back and borrowing forecasts are lower. That's all quite good news. But, broadly speaking, the Budget was quite neutral."

John Butler, economist at HSBC bank, said the strong rebound Mr Brown is looking for was "based on wishful thinking" and that economic growth would undershoot.

Case study

The entrepreneur: Ruhun and Haroun Rashid

Restaurateurs ­ they own Bengal Cuisine in Brick Lane, East London

Home: Central London house

Family: Four children. Income about £50,000. Company turnover about £150,000 a year.

Savings: Their mortgage is £100,000, having bought their house 12 years ago. Savings include ISAs (£6,000) and bonds bought every year (£2,000).

Company benefits: None

Monthly outgoings: mortgage; £500, buildings £80; and life assurance about £30. Two years ago they spent £100,000 on the restaurant including redecorating and retraining chefs.

Hopes from budget: Keen for a balanced budget that would not drastically increase taxes. Wanted to see more money for domestic services.

Actual budget effect: An increase of £407 in NI and a £9.60 reduction in income tax as well as £11.87 children's tax credit benefit. Will also have to pay more NI contributions on staff. The business could benefit from the abolition of fines for the late paying of VAT, and the freeze on stamp duty if new property is acquired to expand restaurant.