THE chancellor is “gambling on growth” by borrowing billions to fund tax cuts which have given some cause for optimism, Dorset businesses have said.

Kwasi Kwarteng unveiled a “mini” budget which cut the basic rate of tax to 19p, scrapped the 45p rate for high earners and lifted the cap on bankers’ bonuses.

He cancelled the planned rise in corporation tax, along with the levy for health and social care introduced by Boris Johnson’s government, and reduced stamp duty.

Neil Andrews, managing partner of Coles Miller Solicitors in Dorset, said: “The chancellor and the prime minister are gambling on growth.

“Their aim is to use growth to boost the tax take. But are we all borrowing to fund this experiment?

“Removing the National Insurance increase and lowering the basic rate of income tax will be welcomed by employees as interest rates and the cost of living are rising rapidly.”

Dorset Chamber chief executive Ian Girling said: “Many businesses in Dorset will welcome the reversal of the increase in National Insurance contributions and scrapping of the proposed rise in corporation tax.

“The income tax shake-up will go some way to offsetting the cost of living crisis for some consumers although it remains to be seen whether this will result in greater spending on goods and services.”

He added: “Confidence is everything and many business still face a hard winter ahead but the chancellor’s measures do give much-needed optimism.”

Nigel Smith, managing partner at Dorset law firm Ellis Jones Solicitors, said: “Many of the measures in the mini-budget give cause for optimism.

“The reversal of the National Insurance increase will be welcomed by employers and employees although in reality it is a political gesture and returns us to where we were previously.

“The abolition of stamp duty is far overdue in my opinion, so the changes announced today are a step in the right direction. Permanent change is exactly what is needed and I hope that the new thresholds will herald the start of a move towards removal of this tax completely.”

Phil Hoyle, landlord of the London Tavern in Poulner, Ringwood, welcomed the cancellation of proposed increases in the duty rates for beer, cider, wine and spirits.

He said: “While I welcome this announcement pubs and the whole hospitality sector face a very difficult future.

“All our costs have rocketed and with the cost of living crisis fewer people are going out."