Industry fears a Budget tax rise

SIGNS of recovery in hard-pressed manufacturing industry will stoke fears that Chancellor Gordon Brown is planning a Budget tax raid on business.

Monday's Confederation of British Industry survey will show some brightening of the gloom that has shrouded small and medium-sized industrial companies. After nearly a year of falling export orders and output, the rate of decline is slowing, though total orders continue to fall.

Brown, currently working on his Budget to be delivered on 17 April, is widely tipped to be planning to increase National Insurance contributions paid by workers and - critically for industry - by employers.

Another possible cash cow is VAT. Some observers believe Brown will take advantage of low inflation to raise more than £5bn by raising the main 17.5% rate to 19% or more, taking it closer to the European Union average. That would hit sales and business profits.