Research and development (R&D) tax credits will rise under the 2007 Budget announced by the Chancellor today.

From April 2008, the large company credit will go up from 125 per cent to 130 per cent. And the credit available to small and medium-sized firms will rise from 150 to 175 per cent.

The increases were part of a range of measures aimed at improving UK productivity and ensuring competitiveness in the global economy. Changes included a two pence cut in corporation tax and a 25 per cent cash increase in public investment in science by 2010-11.

'To lead in global competition - and particularly to secure our place in the high value-added, investment-driven growth sectors of the future from modern manufacturing and the creative industries to business and financial services and the city - Britain must champion open markets flexibility and free trade - an open and inclusive globalisation, not protectionism,' Chancellor Gordon Brown told parliament.

'And here the right policy is to combine the most modern and flexible competition regime including, as announced today, the further extension of risk based regulation - into employment tribunals - with the most effective incentives and support for British investment and British innovation,' he said.