Much pain has been anticipated in George Osborne’s first Budget today.

Experts anticipate tax rises across the board including a hike in VAT to 20 per cent (Value Added Tax) and that the public sector will see pension cuts. However, this blow could be softened by a freeze in council tax for a year.

While ensuring that the government generates enough income to pay off the UK’s multi-billion pound debt, Chancellor Osborne must also ensure that the country does not re-enter recession.

“Manufacturers are longing for a clear roadmap that demonstrates how the UK can become a more attractive and competitive place to do business,” said Ian Workman, head of region at Barclays Corporate.

“As part of this roadmap, the sector is now crying out for clarity on what the new tax regime, capital allowance system and spending cuts will look like so that companies can make the capital investment decisions that many have been putting off for so long.

“Should clarity result in confidence and therefore a substantial increase in investment, it should assist in the public/private economic re-balancing the government is set on achieving.”

He added: “Retailers won’t be surprised if there is a rise in VAT. The sector has been looking at cost bases and price points since January and the majority have already planned for a rise. However, the timing of an increase is what retailers will be listening out for. We believe it may be October or, at the latest, February so the crucial Christmas trading period is not affected.

“The retail sector would rather any rise were brought in as a one-off increase in order to reduce the administrative burden.

“We may well see differential VAT rates introduced to protect and stimulate growth among certain retailers such as car dealers,” he predicted.