Business has called on the chancellor to help smaller firms and boost investment in developing new products.

Both the CBI and the British Chamber of Commerce have urged Gordon Brown to come up with improved grants aimed at boosting research and development.

If Britain is to meet the chancellor's targets of strengthening the economy and boosting productivity, they argue companies will need help develop the ways to do it.

"It's crunch time especially for small businesses. We're urging the chancellor to deliver more help to smaller firms. The sector is still in the doldrums," said the BCC spokesman.

"We also want to see some measures to promote investment and innovation, particularly in manufacturing. This is going to be crucial."

There was also a warning that firms would need help to achieve social changes such as better working hours and training opportunities.

"We are hoping there will be a package of support to help small businesses cope with the government's work/life balance agenda and something that builds on the government's suggested training tax credit for small employers," said the BCC.

The CBI pressed Brown for Budget tax cuts of up to £2 billion and the start of a sustained programme to reduce business costs over the next four years.

Digby Jones, CBI director general, said: "The increasing tax burden is eating into the ability of firms to fund expansion, create wealth and sustain more and better-paid jobs. The government must begin rolling back these costs or end up paying a high price.

"Business is so globally mobile and the UK must maintain its position as the international location of choice. We need an increasingly competitive tax regime to attract and retain the companies of the future."The CBI also backed a research and development tax credit but warned it would need £1 billion to have any effect.

In addition there was a call for an extension of discounts on the climate change levy and a reduction in stamp duty on business property.

Jones urged the chancellor to avoid seeing business as a "cash cow" that could be used to avoid hitting voters with tax hikes.

"It is wrong to see raising business taxes as a less painful alternative to politically unpopular individual tax increases. After-tax profits are inextricably linked with the ability to pay good wages, offer competitive prices and invest for the future," he said.