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Business groups in the North East and further afield have given a broad welcome to the Government’s ‘mini Budget’ - but warned that significant challenges lie ahead for the economy.

Chancellor Kwasi Kwarteng announced a range of tax cuts as he spent tens of billions of pounds in what is widely being seen a gamble to drive up growth during the cost-of-living crisis. Mr Kwarteng argued his economic vision will “turn the vicious cycle of stagnation into a virtuous cycle of growth” but his comments that the Government would favour growth over “redistribution” have raised fears that areas like the North East are set to miss out.

Shadow chancellor Rachel Reeves said the strategy amounts to an “admission of 12 years of economic failure” and said that “the Government have decided to replace levelling up with trickle down.”

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Reacting to the Chancellor, John McCabe, chief executive of the North East England Chamber of Commerce said: “The big-ticket items around Investment Zones, planning and infrastructure all have real opportunity to accelerate growth across the region. But we’ll need to see the freedoms and flexibilities proposed backed-up with investment and a continued commitment to genuine local autonomy.

“This is particularly important in the North East: further devolution in the North of the region will be a key tool in helping Government achieve its goals. We’ll also be working with our members to make sure any unintended consequences of these changes, such as the displacing of talent or investment, are designed out of the process so that they can work for the whole of the North East.

“The Government now has a challenging task ahead of it: to achieve its tax cutting agenda whilst sustaining public investment which we know is at the heart of productive and thriving places. The Government’s plan is one part of the solution. But in a week where we’ve seen the North East top the league for the highest rates of child poverty nationally we look forward to working with the Chancellor on skills, inclusion and the wider Levelling Up agenda.”

Tony Danker, CBI director-general, described it as a turning point for the economy, adding: “Today is day one of a new º£½ÇÊÓƵ growth approach. We must now use this opportunity to make it count and bring growth to every corner of the º£½ÇÊÓƵ. 15 years of anaemic growth cannot be repeated.”