This year’s budget is likely to be an "expresso" one - that is, short and strong with plenty of froth and enough sweetener to take away any bitter taste, according to Northern Ireland largest business advisors, PricewaterhouseCoopers (PwC).

With the budget date now confirmed for Wednesday 9 April, PwC tax partner John Adrain stressed that with £8 billion of tax rises – in the form of National Insurance Contributions - due on 6 April, major tax rises in this year’s budget are unlikely.

“The economy is slowing while public spending continues to grow and that means another budget deficit. However, despite getting his economic growth sums wrong again, the Chancellor will be able to cover the gaps with increased borrowings- at least for the present," Mr Adrain said.

“But stay awake on Budget day for any hints of tax rises to come. If he does need more money, VAT or National Insurance could be in the firing line.”

PwC said that falling government revenues, sluggish economic recovery and the likely war in Iraq would all take their toll on public expenditure limits. Despite the unlikely prospect of tax hikes on 9 April, Mr Adrain said companies and individual taxpayers should stay on the alert for the Gordon Brown’s "usual sleight of hand".

“For individuals, the increase in National Insurance Contributions- offset for some by the £2 billion extra giveaway on tax credits- is not the only tax increase that could hit your pay packet this year. If the Chancellor doesn’t increase the 40% income tax threshold, over three million higher rate taxpayers will be worse off.

“For businesses, the Chancellor will no doubt have some measures to stimulate enterprise and innovation, like higher R&D and IT allowances and credits for staff training. But there is no guarantee these will be appropriate for Northern Ireland's small private sector and smaller average company size.”

With over a third of Northern Ireland’s exports destined for the GB market, businesses will be listening carefully to the Chancellor’s analysis of future growth prospects.

Mr Adrain concluded: “Despite the recent cuts in interest rates, history tells us that when sterling falls interest rates tend to rise. Individual taxpayers and business will all be hoping that history doesn’t repeat itself.

“With dark economic clouds looming the Chancellor’s reputation is on the line. So, expect an espresso budget - short and strong with plenty of froth and enough sweetener to take away any bitter taste and give the economy a pick-me-up.”

(MB)