Budget: World told 'Britain is ready for your custom'

Budget coverage in full

Hear informed debate in a special edition of our BusinessTalk podcast, with experts from Deloitte in Leeds

He pledged to reduce the main rate of corporation tax from 28 per cent to 24 per cent over the course of four years from 2011, which will give the UK the lowest corporation tax in the G7 and the fifth-lowest rate in the G20.

Mr Osborne also promised to reduce the small profits rate to 20 per cent, reform rules on the taxation of profits made by British companies overseas and make it cheaper for companies to hire people by raising the threshold at which employers start to pay National Insurance.

He said the Budget "offers a stable and consistent platform for a private sector recovery" which would "will help companies invest, attract foreign investment, and boost growth".

Business gave a generally positive reaction, with the FTSE holding steady and the pound rallying against the dollar and euro.

Richard Lambert, director-general of the Confederation of British Industry, said the Budget gave clear recognition to the role business needed to play in generating jobs and wealth to get the economy back into shape.

He welcomed the five-year road map for corporation tax which together with consultation on foreign profits and intellectual property "will help prevent and could even reverse the flow of companies overseas".

Mr Lambert added: "Business strongly commends the new and refreshing approach to tax policy-making which should help ensure that the UK tax regime returns to the forefront of international competitiveness."

Professional services firm Deloitte calculated the overall effect was to reduce corporate tax by more than 1bn a year.

Stuart Cottee, head of tax at Deloitte's Leeds office, said: "The Government "intends to develop its view that in general a broad tax base, a low rate and a more territorial approach will improve competitiveness."

Manufacturers organisation EEF described the corporation tax reforms as a useful first step towards improving competitiveness and predictability, which could stop the unwelcome legislative churn of recent years.

But the Government also plans to reduce the annual investment allowance – an amount you can write off against taxable profits – to 25,000 a year.

It also plans to cut the level which companies can claim tax relief on plant and machinery assets from 20 per cent to 18 per cent – with a special rate for longer-lived assets from 10 per cent to eight per cent from April 2012 .

This means companies can receive full tax relief on areas such as construction costs, but over a longer time frame.

In addition to the cuts, the Government announced plans to establish a business forum, chaired by Danny Alexander, Treasury chief secretary, to consult with multinational businesses on the UK's tax competitiveness.

To help small businesses struggling for credit, Mr Osborne said he plans to extend the enterprise finance guarantee scheme, which supports SME access to lending.

And he said Vince Cable, the Business Secretary, will reveal proposals later this summer to expand the availability of credit to small businesses.

In an overture to one of Yorkshire's most important sectors, Mr Osborne said: "Manufacturing as a whole will pay less tax."

While welcomed, one South Yorkshire manufacturer, Craig McKay of Evenort, said he was disappointed "that this sentiment was not in mind when deciding the fate of the Sheffield Forgemasters 80m loan last week".