A budget of good and bad news - that was the reaction of the region's business community to the Chancellor's statement.

While the Engineering Employers Federation (EEF) condemned the one per cent rise in employers' National Insurance contributions as doing nothing to improve the fortunes of struggling manufacturers, the TUC welcomed plans to improve public services and tackle poverty.

Alan Hall, northern director of the EEF, said: "While we welcome the measures for small firms, these will provide minimal benefit compared to the additional costs of more than £3bn resulting from the one per cent increase in employers National Insurance contributions - £3bn of extra costs is £3bn less to invest as manufacturing seeks to recover.

But Paul Nowak, regional secretary of the TUC, said the Chancellor had unveiled an "honest and intelligent" statement.

He said: "The Chancellor seems to have got the balance right and we are particularly glad of the money for the NHS."

North-East regional director of the CBI, Stephen Rankin, said Gordon Brown had responded positively to many of the proposals that his organisation had submitted to the Treasury.

But on a less positive note, Mr Rankin said there were concerns over measures which would lead to an increase in business costs.

He said: "The business community in the North-East has always regarded this Government as a business-friendly Government.

"But the devil, as always, is in the detail and there are some measures which will be going out to consultation, so we need to get into that and see what happens."

Rachel Spence, head of policy at the North-East Chamber of Commerce said: "We've seen the good and some of the bad in Mr Brown this afternoon - let's hope the ugly is not hidden in the detail.

"He has produced a number of measures which should help business, especially small firms. But the increase in National Insurance is very bad news - driving up the cost of employment for all companies - large and small."

Alistair Arkley, chairman of the Tees Valley Partnership, welcomed proposals in the Budget which, he said, would "make a significant contribution towards encouraging investment in areas of real need, by helping to create the kind of new businesses we need for economic regeneration".

But this view was not shared by Peter Troy, chairman of the Darlington branch of the Federation of Small Businesses.

He said: "The rise in employers' National Insurance is a direct increase in business costs and when combined with the increase in the Employees NI contributions, this is the equivalent of an increase of 2p on income tax.

"It is a tragedy that the Chancellor has decided that the self-employed will also pay higher National Insurance Contributions. This undermines any attempts the Chancellor has made to help the low paid."

But Mr Troy did welcome the Mr Brown's moves to simplify VAT.

He said: "We have been pushing for VAT simplification over many years and a flat rate will give real benefits to small businesses.