GIVEN Mervyn King’s recent comments that he expects to see growth of three per cent by the middle of next year, and 3.75 per cent by the year after, together with recent polls showing that people are more optimistic than at any time over the past 18 months, one would be forgiven for thinking that the recession is nearly over.

My personal view is that this optimism is the result of the fact that the decline appears to be slowing and that we may have reached the bottom, rather than an actual upturn.

It is, though, a start on what will I believe be a long and slow climb to recover the six per cent contraction in the economy, which has occurred over the past 18 months. The Bank of England’s latest report supports this view.

There are a couple of reasons for this. The most important rests with the state of the public finances.

The pre-Budget report is now due to be delivered on December 9 and will provide an update.

Chancellor Alistair Darling has already stated that this report will include a package of measures designed to help pay off Government debt, which will centre on the muchreported tightening of public spending and tax revenues.

It is this latter point that alarms me, especially given some of the measures announced in previous budgets, such as the rise in corporation tax for small businesses from 19 per cent to 21 per cent.

At the same time, the ability of, say, a manufacturing business to claim tax relief has been changed. In respect of higher earners (£150,000 plus), while the 50 per cent band has been discussed at length, they are also having rules imposed on them in respect of pension relief – based on earnings in any of the previous three years!

I trust the Chancellor will be sensible with any tax changes, as business remains extremely fragile, and I hope the reason for the late pre-Budget report is not to stifle debate, given that parliament will recess on December 17.

■ Chris Beaumont is chairman of North-East Chamber of Commerce Tees Valley.