TOMORROW is Budget day, and it’s six weeks away from the expected General Election date. That combination would normally mean a series of tax breaks, populist spending commitments and other giveaways designed to ingratiate the incumbent government with the electorate.

Unfortunately for Alistair Darling, that’s not an option this time around.

With public debt heading upwards towards 77 per cent of Gross Domestic Product, the cupboard for pre-election fillips is bare.

Some combination of tax rises and spending cuts is inevitable, and we must all brace ourselves for a period of austerity.

But announcing unpopular decisions on where to make these so close to going to the polls is something the Chancellor will be desperate to avoid.

This leaves businesses feeling nervous. Firms won’t be voting in May, so an easy assumption for the Chancellor might be that extra business taxes, or cuts to services they need, can be implemented with little electoral pain.

Hopefully, he’s thinking more long-term than that.

It’s clear that the public sector will not be able to stimulate economic recovery or increase employment in the North- East in the near future.

Therefore, the whole region has a huge vested interest in the success of our businesses. That’s why the North East Chamber of Commerce has said all policies must be made to pass an economic recovery test in 2010.

There is some good news where that’s concerned.

The UK came out of recession at the end of last year, and chamber members reported growth in sales and orders. But this is fragile, and could be all too easily reversed by poor decisions, for instance, over tax and spending.

So what do we want to hear from Mr Darling? As much as possible. Businesses need clarity on how the public finances will be tackled, so they have the confidence to take investment decisions.

On the specifics, plans to increase National Insurance contributions – a straightforward tax on jobs – must be reversed.

Capital allowance increases made last year should be continued as there remains a need to stimulate business investment.

And the temptation to save money by cutting infrastructure spending must be resisted.

Innovative financing such as accelerated development zones may be a way to assist this.

Mr Darling’s speech tomorrow may or may not help his party’s prospects in the next six weeks.

Whether it helps North- East businesses in the next 12 months is much more crucial.

■ Chris Beaumont is chairman of NECC Tees Valley Committee.