Business leaders reacted cautiously to Alistair Darling’s first budget, which made an attempt to build some bridges with entrepreneurs and SMEs.

With borrowing set to rise by a further £20bn over the next four years, no mention of the Northern Rock crisis and small and medium enterprises dealt a blow on capital gains tax (CGT), this could be viewed as pessimistic Budget for business.

However, there were concessions to ease the burden on small business, and welcome news of a government drive to promote entrepreneurialism and boost female bosses in the workplace, as well as a promise to allow private sector SMEs to bid for up to 30% of government contracts. But whether it will offset the sting of CGT remains to be seen.

Reacting to the Chancellor's Budget speech, Richard Lambert, director-general of the CBI, said:

"The government has much to do if it is to win back its enterprise credentials, but the measures announced today are a credible first step on the road. Although the anger over capital gains tax is still simmering, entrepreneurs and smaller businesses will recognise that the government has made an attempt to listen."

But Lambert said businesses must not lose sight of the whole raft of tax rises scheduled to kick in from April, putting a "further squeeze on firms at this already turbulent economic time".

He welcomed the delay in introducing income-shifting legislation describing it as a "tax raid" on family-run businesses and an "intolerable burden on the wider SME community".

He added: "We welcome improved access to finance, with the removal of the five year trading restriction in the Small Firms Loan Guarantee and the injection of new capital for the current year.

"Small businesses will be encouraged by the measures to improve access to public procurement contracts. We also welcome the uplift in thresholds for the Enterprise Investment Scheme which should encourage more investment in growth companies."

However, Darling’s endorsement of taxing non-domiciles £30,000 to keep their overseas income and gains out the UK tax net was described as stifling entrepreneurialism and wealth creation, and fundamentally impacts on the competitiveness of British business within the global economy.

Albert Ellis (pictured), chief executive of Harvey Nash, said: "Attracting talent from around the globe is one of the central pillars to the perception of London as a global financial capital; penalising this talent can only reduce the flow of highly skilled people into the UK economy."