Business leaders in the West gave yesterday's "tough but fair" Budget a cautious welcome, even though billions have been slashed from government spending and VAT is to be raised.

Ben Yearsley, from Bristol stockbrokers Hargreaves Lansdown, said: "The Government had some very difficult decisions to take and it seems that they have done their best not to penalise anyone.

"Mr Osborne seems to have done his best to share the load around evenly and the first reaction to it is that, on the whole, it is a pretty balanced budget.

"There was always going to be some pain and by raising VAT to 20 per cent, the burden is shared between everybody."

GWE Business West represents hundreds of small companies and businesses in the region, and is one of the most powerful voices in the region.

The organisation welcomed some aspects of the speech but added a note of caution about the frailty of the recovery from recession.

Phil Smith, joint managing director of the organisation, said: "Our fears lie in what the Chancellor had to say about generating new jobs across the country as a whole.

"The creation of an Economic Growth Fund to support capital projects sounds like good news but when he came to confirming the go-ahead for a number of large infrastructure projects, they were all either in the Midlands or the North."

There was government backing for a number of major transport schemes across the UK but there was no comment on the south Bristol ring road.

Fellow GWE Business West joint managing director John Savage added: "There is a real risk that the Government may have a perception that our area is not as needy as elsewhere.

"However, we know that improvements to our transport system, for example, are absolutely vital if we are to continue to grow. Therefore GWE Business West will continue to make the case on behalf of all our members for the need for greater investment in this area in order that the private sector can do what the Chancellor says he aspires to – deliver prosperity for all."

The Federation of Small Business also gave a mixed reception.

A spokesman said: "The measures will go a long way to reducing the deficit and will please the 93 per cent of FSB members who called for a clear plan on tackling debt.

"The increase in VAT to 20 per cent will, however, hurt small firms who will have to pass the increase on to their customers, unlike big business which can absorb the cost."

Ian Baxter is managing director of Stoke Gifford firm RH Freight, an independent, privately-owned business, with more than 650 staff operating out of 19 UK locations.

In the past he has been unhappy with rises in fuel duty but was a lot more upbeat about yesterday's Budget.

He said: "This Budget has spread the pain fairly and recognises that the economic recovery depends on supporting business to generate growth."

Malcolm Joy, Tax Partner based at the Bristol office of accountants BDO, said: "It will be interesting to see if retailers will absorb the rise in VAT when it comes in to force on January. When VAT was temporarily reduced, retailers passed on those savings, so will they also absorb the rise?

"News of National Insurance breaks for new firms is also noteworthy – it will be worth watching to see if this will generate growth.

"The gradual reduction in corporation tax is clearly designed to make the UK more competitive for inward investments, so that is a step forward and could help both preserve jobs and attract new business in the South West – a region which already benefits significantly from inward investment."

What is still unclear following yesterday's speech is the future of the South West Regional Development Agency.

The organisation, which was set up to oversee economic development in the region, is still waiting to here if it will be axed by the coalition Government.

And once again the Government emphasised it wants to concentrate financial aid on areas such as the North West and the Midlands, which are not seen to be as wealthy as areas such as the South West.

Donald Barr, economics and evidence manager at the South West RDA, said: "Measures announced in today's emergency Budget will help the region's businesses during this recovery period.

"It is very welcome that the South West should not be considered a part of the 'Greater South East' and will be eligible for the NICs concessions for new enterprises.

"Treasury estimates say this could assist 54,000 businesses in the South West. The regional growth fund also sounds like good news for the South West, and we await the detail with interest as to how it will be administered.

"The Chancellor also announced a repeal of the special tax rules for furnished holiday lettings presented in last year's Budget. As the South West attracts the highest domestic tourism market share, it will come as a relief to the region's tourism industry."

Samantha Hart, entrepreneurial business partner for Deloitte in the South West: "Today's Budget announcement held some interesting initiatives for the entrepreneurial business community, namely that the enterprise finance guarantee (EFG) scheme will be extended.

"The EFG scheme plays a key role in providing lending to small businesses that wouldn't normally be able to access traditional forms of finance.

"Therefore, the Chancellor's move to increase the EFG scheme by £200 million to support additional lending of up to £700m until March 31, 2011, is one that is likely to help a number of fast growing and entrepreneurial businesses.

"Other welcome moves included the reduction in the small companies tax rate by 1 per cent to 20 per cent and that the 10 per cent rate of capital gains tax for entrepreneurs will be extended to lifetime gains of £5m, which currently only applies to the first £2m."