BUSINESS leaders in the north west have given a mixed reaction to the Pre-Budget Report, with many questioning whether the chancellor had 'taken business forward'.

Amid dire warnings about the scale of the damage being done to industry as Britain heads towards recession, the chancellor unveiled a £7bn package to help smaller firms through the downturn.

Alistair Darling, describing smaller firms as the 'engine' of the British economy, said he wanted to help equip them for the challenges of the future, improve access to credit, ease cash flow and reduce burdens.

He also announced that he had decided to defer the increase in the small companies rate of corporation tax, which firms pay on their profits, leaving their tax rate in 2009 unchanged.

Andrew Semple, north west spokesman for the manufacturers' organisation EEF, had expressed his hope that the government would unveil a £30bn package - rather than the £20bn announced yesterday.

Mr Semple said: "The big question is `has this taken business forward?'

"The government had to meet three criteria with this statement, in terms of being temporary, targeted and timely. It has gone some way towards meeting the first two of these with a range of measures to help business cashflow.

"However, in terms of being timely there are a number of factors at play before this can be delivered. It is essential the government ensures the acceleration of capital spending is carried out quickly and is directed towards ensuring that UK-based companies benefit.

"It is also vital that pressure is maintained on the banks to deliver support for lending. But business will be asking if this goes far enough and if it can be delivered in a timely fashion."

Paul Henly, north west regional policy manager for the Federation of Small Businesses, said: "The government's Small Business Finance Scheme will provide a vital cash boost to businesses struggling with rising costs and a lack of credit."

Richard Lambert, CBI director-general, said that there were a number of measures that would help cashflow for small businesses, 'but the chancellor's growth forecasts depend on his success in stimulating consumer spending and otherwise look optimistic'.

He added: "The £5bn package comprising the small business finance scheme and loans from the European Investment Bank should, if well and speedily implemented, give critical help to small firms in need.

"The exemption of foreign dividends from taxation is welcome. It will help to stem the incentive to move tax domicile overseas."