Few surprises but George Osborne’s ‘Plan A plus’ wins applause

Although most of the flagship policies had been leaked before yesterday’s announcement – including a £40 billion credit-easing scheme to reduce the cost of finance for SMEs – the Chancellor still had a few surprises up his sleeve. He announced a £1bn business finance partnership to encourage more private-sector funds to invest in medium-sized companies.

CBI director-general John Cridland said: “This autumn statement works with the realities of today and provides an imaginative framework for UK businesses as it strives to secure growth and jobs. This is ‘Plan A plus’ in all but name.”

The Chancellor stuck to his guns and resisted calls from opposition politicians and some economists to decelerate his public sector deficit reduction plan even though the Office for Budget Responsibility was forced to dramatically slash its GDP forecasts for this year and next.

Simon Walker, director general of the Institute of Directors, praised the government for answering calls from businesses to invest in infrastructure, by paving the way for pension and insurance funds to help finance major public works such as road and rail improvements.

“No-one is pretending that it’s going to be easy or painless, but there’s no credible alternative to the deficit reduction plan,” said Walker. “We wanted Plan A with more infrastructure spending, and that’s what we got. I believe business confidence will have been boosted by [yesterday’s] announcements.”

Osborne put a particular emphasis on how the government would support the nation’s army of SMEs by pledging to reduce the burden posed by red tape and making it easier for small firms to bid for public sector work. He also cancelled January’s proposed increase in fuel duty, which, according to the Federation of Small Businesses (FSB), was a real concern for small business owners who are reliant on making deliveries and using their cars.

Andy Willox, the FSB’s Scottish policy convenor, said: “We’re pleased that much of the Chancellor’s rhetoric suggests he understands many of the issues holding back the Scottish small business community. However, it remains to be seen if any of the individual measures announced will effectively tackle the problems that have been identified as barriers to economic growth.”

The Chancellor did, however, invoke the wrath of the aviation industry which had been pushing him hard to scrap a hike in airport passenger duty (APD). Bosses from of all of the major airlines, including Willie Walsh of International Airlines Group, Carolyn McCall of EasyJet, Michael O’Leary of Ryanair and Steve Ridgway from Virgin Atlantic, issued a joint statement warning about the detrimental impact on jobs and tourism of the increase. “APD is an own goal – and the Chancellor has just scored another one. By increasing this tax by double the rate of inflation, he is further deterring inbound tourism and foreign investment, and choking off yet more job opportunities for young people,” they said.

The markets rose slightly, with the FTSE ending up 24 points at 5,337, as investors responded positively to the Chancellor’s decision to stick with his austerity plan.

Jeremy Batstone-Carr, market strategist at Charles Stanley, said: “Financial markets could hardly have asked for more from the Autumn Statement.”