The business community has broadly welcomed the formation of the new Conservative-Liberal Democrat government as an important step towards offering stability and certainty.
The Federation of Small Businesses (FSB) said that it was vital that both parties have made compromises to safeguard business and market confidence.
On the specific policies, the FSB applauded the reversal of the 1 per cent increase in employers’ NICs and was pleased that Capital Gains Tax proposals for businesses will not be changed.
The adoption of the Liberal Democrat policy to raise the personal tax allowance to £10,000 as a long-term goal was also welcomed by the FSB.
While the Enterprise Finance Guarantee scheme has worked well, the FSB expressed approval that the coalition is discussing the possibility of a national loan guarantee scheme to get more credit flowing to smaller businesses.
John Walker, the FSB’s national chairman, commented: “While compromises have been made, the policies laid out will help to safeguard business confidence allowing it to support further economic recovery.
“We are pleased that coalition negotiators have listened to the business community and plan to reverse the proposed increase in NICs for employers. A healthy increase in personal tax thresholds is something that FSB has been urging for some time. This will not only provide more disposable income for the lowest paid workers, but will also encourage businesses to take on more staff.”
On the coalition policy document, Richard Lambert, the CBI’s director general, said: “This is a credible document which shows that the government is committed to tackling the major issues.
“We particularly welcome the significant acceleration in the reduction of the structural deficit and the plan to achieve it through reduced spending rather than increased taxation. This will underpin growth at a critical time.”
David Frost, director general of the British Chambers of Commerce (BCC), voiced similar sentiments but with a caveat: “We look forward to working with the new coalition government during a critical time for the economy.
“We will judge the new administration on the basis of what it does to promote business recovery across the UK. The BCC wants to see the delivery of a clear and achievable plan for business over the first ninety days of a new administration – a plan that puts business growth at the centre stage.
“Fixing the public finances must be at the top of the agenda. The coalition must be absolutely clear about where spending cuts will fall, and about the need to curb relentless growth in the size and cost of the public sector.
“We need concrete proposals to reduce red tape and tax burdens on business; action to move the economy away from consumption and the public sector and towards exports; and commitments to improve Britain’s key business infrastructure.”
Miles Templeman, director general of the Institute of Directors, also reserved judgment on key policy areas, particularly that of taxation.
Mr Templeman said: “We welcome the emergence of a new government to fill the power vacuum created by the indecisive election result.
“However, the key test facing the coalition is whether it can maintain a stable government over a significant period of time that delivers large cuts to public spending, and whether it can generate policies across all areas that genuinely supports business and economic growth.
“Each party has favoured or protected areas of public spending that are uniquely their own. Unless both show a willingness to make some sacrifices, there is a danger that tax hikes become the main tool to fix the public finances.
“No one should be in doubt that tackling the deficit primarily through tax increases would jeopardise the private sector and the country’s ability to pay for first-class public services in the future. A significant overall tax hike that hits employees and businesses would be a major error.
“Both parties have policies, particularly in relation to airport expansion and employment law, that concern us. There are also points of tension, such as on nuclear power. We will be watching closely how the coalition operates in these areas to ensure that both parties understand what is at stake in terms of business growth.”
