The “new approach for a new era” unveiled yesterday by Kwasi Kwarteng has drawn a mixed reaction as business leaders and economists questioned whether the Chancellor’s mini-Budget measures amount to a viable policy or a reckless roll of the dice.

Some such as the hospitality sector were distinctly dismayed as the biggest collection of tax cuts in 50 years failed to include a reduction in VAT to help bolster flagging consumer spending. On the other hand, there was near-universal delight with the reverse on the recent increase in National Insurance contributions, widely regarded as a “tax on jobs”.

All applauded acknowledgement of the need to boost economic growth, and cautiously welcomed efforts towards this end. However, many also likened the dramatic new direction in government fiscal policy to a game of chance.

Garry White, chief investment commentator at Charles Stanley, said market reaction to yesterday’s news underlined the fact that “just putting money into the economy does not result in sustainable long-term growth”.

“Global investors failed to be impressed by Kwasi Kwarteng’s great growth gamble,” he said. “British shares fell, UK gilt yields surged to almost 4 per cent, and the pound hit a 37-year low against the dollar.”

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CBI director-general Tony Danker said the massive amounts spent on Covid and now the energy crisis have left the UK with “no choice but to go for growth” after 15 years of anaemic economic expansion.

“Taking action to get Britain’s economy moving again by beginning construction on transport and green infrastructure projects shows immediate delivery,” he said. “Planning reform is long overdue. A simpler, smarter approach to tax can pay dividends, and firms will be keen to make the most of the investment incentives on offer.

“It’s not perfect – it’s just the beginning – but there’s plenty business can work with. The Chancellor signalled more proposals to come this autumn and these will be vital to sustain momentum on growth.”

Martin McTague, national chair of the Federation of Small Businesses (FSB), said Prime Minister Liz Truss’s government is “off to a flying start” with the reversal of all the increases in National Insurance Contributions that took effect in April. He also welcomed scrapping of the planned increase in corporation tax, saying the £50,000 threshold for the main rate would have “captured” many small firms.

Andrew McRae, policy chair for the FSB in Scotland, further praised the repeal of IR35 rules which govern the relationship between larger companies and their smaller contractors. These rules have been of particular concern to Scotland’s oil and gas sector, which relies heavily upon contractors.

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“Of course, many of the more eye-catching announcements – on everything from income tax to investment zones to planning reform – are either wholly devolved to Scotland or at least involve co-operation between our various governments,” Mr McRae said.

“It will be interesting to see how the Scottish Government decides to proceed in light of these moves and, indeed, how it chooses to spend any consequentials.”

Marc Crothall of the Scottish Tourism Alliance is calling on the Scottish Government to introduce a 12-month moratorium on business rates – an issue which failed to get a mention in yesterday’s statement from the Chancellor – as a way of getting immediate relief to struggling businesses in the sector. These firms had also hoped for a cut to the rate of VAT, which did not happen.

The Scottish Licensed Trade Association has warned that failure to address these “biggest concerns” means the mini budget amounts to “too little, too late”.

“We are now in a recession, have the lowest consumer confidence rates since records began and interest rates continue to rise,” chief executive Colin Wilkinson said. “Coupled with the cost-of-living crisis and crippling energy prices, there is not much to cheer about despite the cap on wholesale energy prices.”

He added: “All help is, of course, welcome but the Chancellor has only given SMEs and independent operators yet another sticking plaster to fix a broken leg. It’s too little, too late.”

Sandy Begbie, chief executive of Scottish Financial Enterprise, said Mr Kwarteng’s proposals are obviously focused on growth but there must be a recognition that there are other major structural barriers.

“This includes addressing unacceptable levels of poverty, closing skills gaps, supporting entrepreneurship and innovation, developing new post-Brexit regulatory frameworks, creating a business-led immigration policy and driving the journey to net zero,” he said.

“Without these fundamentals, we will struggle to create the business investment which is required to make this fiscal plan successful.”