COMPANIES in Northern Ireland have given a guarded welcome to the measures announced by British Chancellor Mr Gordon Brown in last week's budget.

The Federation of Small Businesses said companies would benefit from the reintroduction of the 50 per cent first-year capital allowance, the reduction of corporation tax, and subsidies of Pounds 75 per week to employers recruiting long-term unemployed under the Welfare to Work programme.

The Federations chairman Mr Bill Jeffrey said his members were "cautiously optimistic".

"We are quite pleased that the capital allowances have been raised to 50 per cent," he said.

"We had lobbied for 100 per cent, but we are reasonably happy nonetheless. There is a query over corporation tax, though. It now means that a small limited company will pay less tax than a sole trader, which is the status of many business people in Northern Ireland. So they will now find themselves at a disadvantage"

The Confederation of British Industry in Northern Ireland said the budget measures would be good for the local economy by cutting its tax bill, and encouraging investment and stability.

CBI chairman, Mr Bill Tosh described it as an investment-friendly" budget, and that the reduction in corporation tax and the increase in capital allowances for investment were most welcome.

Mr Tosh said that the tax on mineral extraction was also welcome because it would encourage recycling.

Northern Ireland Electricity, which as a privatised utility is now liable to incur a sizeable windfall tax, is less happy. It is expecting to have to pay around Pounds 44 million.

The company's chief executive, Dr Patrick Haren, said he was disappointed at the size of the levy, and that local electricity generators were excluded, which meant that NIE would be the only local company to be affected.

Dr Haren also criticised the electricity regulator, who, he said, had made matters worse by not having reached a decision on a Monopolies and Mergers Commission referral regarding the generators.