By Damien Clarkson, exclusive to MSN Money, 22/04/2009 00:00

A Budget that does little for business

Chancellor Alistair Darling's crucial Budget may well go down as one of missed opportunities and misguided initiatives as far as the business world is concerned.

Given the government's abysmal finances, Darling was always going to have limited room for manoeuvre - and so it proved.

Without doubt the biggest piece of news in today's Budget for business is the decision to double the main capital allowance rate for businesses to 40%, a move which the chancellor claimed would translate into £50 billion of tax relief to support investment.

Key also is the extension of the initiative that allows loss-making companies to reclaim taxes on profits made in the last three years until November 2010.

"This help, which will lead on average to repayments worth £4,000 each year, will... see well over 100,000 businesses wipe out their full current losses," said Darling.

Certainly this will prove a vital lifeline to many, but beyond these headline decisions there is a notable lack of substance to the chancellor's speech as far as business is concerned.

Budget winners and losers

Scrappage scheme not a silver bullet
Much has been made of the decision to implement the car scrappage scheme, whereby motorists will be paid £2,000 to trade in their old banger for a shiny new "green" car.

The government hopes this will revive the ailing British motor industry - a similar scheme in Germany resulted in an almost 40% rise in car sales - but some critics have pointed out this is likely to be a better deal for the consumer than the manufacturer.

For starters, car makers will be expected to stump up £1,000 of that £2,000 discount and will also be responsible for scrapping a buyer's old car. Given manufacturers export a high number of cars as well, it's easy to see why this may not prove the silver bullet for the industry it first appeared.

Credit markets are still tight
Of course, to buy a car many people will need to borrow money and credit (as you may well have read) remains tight.

This Budget remained vague on exactly what will be done to free up credit and allow people to access finance not just to buy cars, but for goods across the economy.

Small businesses feel ignored
There had been much talk in the build up to the Budget that the government would announce a wage subsidy initiative for employers and employees moving towards short-time working, but this proved not to be the case.

The move disappointed the Federation of Small Businesses, which claims the Budget generally ignored their needs.

"Given the difficult economic conditions, the wage subsidy would have been greatly appreciated," said an FSB spokesperson.

"It is a bit of a bland Budget, which largely ignores the things we have been calling for."

The chancellor did have some good news for small businesses, such as a £250 million boost for job programmes and a new scheme to train under-25s.

New age industries could be winners
One area of business which stands to benefit from the Budget is that involved with emerging technologies like biotechnology.

The chancellor announced the creation of a new £750 million Strategic Investment Fund, aimed at helping the country "seize the opportunities ahead".

"It will provide financial support, focusing on emerging technologies and regionally important sectors in, for example, advanced manufacturing, digital and biotechnology," said Darling.

Ailing construction gets a lifeline
The chancellor has also thrown a bone to the ailing construction industry, which has been ravaged by plummeting house prices and the lack of credit.

Darling is to set aside an additional £1 billion aimed at "tackling restraints" and kick-starting stalled housing projects.

Business uncertain of Darling's vision
With almost every sector struggling in the recession, perhaps the most crucial thing businesses were looking for in the Budget was for the chancellor to map out a clear path to recovery.

However, analysts have been almost unanimous in their agreement that Darling's forecasts for the future are at best optimistic, at worst unrealistic.

"The key question for this Budget was whether it set out a credible and rigorous path for restoring the public finances to health," said Confederation of British Industry (CBI) director general Richard Lambert. "The CBI's preliminary judgement must be that it does not."

"The chancellor's economic forecasts for next year and beyond look optimistic. By pushing out the horizon for balancing the books as far as 2018 the government is running too much of a risk."

For the business world, this lack of faith in Darling's vision for the recovery is perhaps the most worrying aspect of all.

Poor