The private equity industry is braced for a "draconian" Budget today, with executives focused on the details of a hike in capital gains tax and possible changes to taxation of debt.

Paul Marson-Smith, chief executive of UK mid-market private equity firm Gresham, said: "There are concerns that this will be a draconian Budget. The government has one chance to blame everything on its predecessor, and any good chief executive would seize that opportunity. But I hope there is not a kneejerk reaction against private equity in pursuit of good politics."