Butchers, bakers and other small businesses will struggle to maintain an entrepreneurial spirit under higher taxation next year.
David Frost, director general of the British Chamber of Commerce, said a 2p increase in small company taxation from April 2008 could stifle the creation and expansion of small businesses.

The move was announced by Chancellor Gordon Brown in last month's Budget, which also contained plans to cut mainstream corporation tax.

Frost added: “What sort of a message does [Brown] send out when, in the Budget, he increased the small-firm rate of corporation tax?”