As Alistair Darling puts the final touches to his Budget speech, due to be unveiled in the House of Commons on 22 April, HR experts are predicting bad news for employers.

Owen Warnock, employment law partner at Eversheds, explains: "The chancellor is playing his cards close to his chest. But there is a good chance he could raise taxes meaning staff will put pressure on their employers to increase their pay."

Last month BT and Toyota joined the growing number of firms implementing pay freezes, so this threat will be another bitter pill for HR professionals.

The Budget could affect the tax on employee benefits, Warnock says: "With stories in the news about high earners accruing massive pensions, the chancellor could remove tax breaks on high pension contributions but keep the breaks for basic contributions," he explains.

And Tim Stovoid, partner in the tax and legal department at Kingston Smith, adds: "We are now entering an election cycle and in the past chancellors have offered a bonanza of public pleasing initiatives to win votes. But this year Darling has to balance the books and there is little chance of a backtrack on increasing taxes."

Yet Dan Wilson, director of consultancy at NorthgateArinso, thinks the Government will want to help employers. He says: "Keeping people employed will be a challenge in itself (for business) so I think the Government will back off a little bit."

But Dan Wilson, director of consultancy at NorthgateArinso, thinks the Government want to help employers. He says: "Keeping people employed will be a challenge in itself [for business] so I think the Government will back off a little bit."

In the pre-budget report in November, the chancellor announced an injection of £1.3 billion to help unemployed people back to work and, as the Office for National Statistics reported last month unemployment has exceeded two million, recruitment remains a hot topic.

Pam Loch, founder and principle of Loch Associates, explains: "Investing in new vacancies and the creation of new jobs could be a real focus of the budget."

And Richard Mannion, head of national tax at Smith and Williamson, adds: "There have been rumours employers who take on staff who were unemployed could receive a national insurance contribution holiday on them for a year - but I don't think that will happen."

The experts all agree either way, Darling will be forced to take a gamble. "I think Darling will take the same approach he did in November, adding taxes through stealth, and he will be gambling on ‘green shoots' appearing at the end of the year, turning into beanstalks in 2010," concludes Loch.

Planned increase in National Insurance will discourage firms from employing staff

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