Employers have attacked the increase to National Insurance contributions, saying it will damage economic recovery.
From April 2011, employer, employee and self-employed rates will rise by 0.5 per cent.
Federation of Small Businesses national chairman John Wright says the move “shows a real lack of vision”.
He says many FSB member firms say a drop in employment taxes would encourage the employment of more staff so the decision to increase NI is very damaging to employment.
“This pre-Budget report should have encouraged and rewarded job creation in 2010 rather than impose this tax.”
The CBI says the move will hold back job creation and growth. Director general Rich-ard Lambert says: “The Chancellor has made a serious mistake imposing an extra jobs tax at a time when the economic recovery will still be fragile.”
The CBI says the steps to limit public sector pay and pensions are welcome, as is the encouragement for companies developing low carbon technology. But it says the headline-grabbing attack on bankers bonuses will be damaging to the UK if financial companies relocate.