Gordon Brown’s budget included £50m of funds for a 10-country project across central Africa to prevent deforestation in the world’s second-largest rainforest.

The headline rate of corporation tax is being reduced from 30% to 28% in April 2008, but the rate for smaller firms with annual profits under £1.5m is to rise from 19% to 22% over the next three years. Other news includes stamp duty exemption on all new zero carbon homes up to £500,000 until 2012.

“People will be concerned that corporation tax on small companies is going to increase over the next three years,” said Richard Lambert, chief executive of the British Woodworking Federation. “But I think this may well be offset in the medium term if the measures to encourage growth through investment are effective and enable more people to make more profits by investing in machinery that the woodworking sector needs.”

Timber Trade Federation chief executive John White described Mr Brown’s announcements as a “stable budget”.

“I am encouraged to see increasing emphasis on environmental taxes which will encourage the use of greener building materials which points towards wood.”

Mr White also said the incentives for building new carbon zero homes would be an opportunity to “get more wood into buildings”, while £50m towards protecting the Congo Basin rainforest was “laudable”.

“It shows the government is putting its money where its mouth is,” he added.

The UK Timber Frame Association welcomed the use of fiscal incentives to encourage interest in carbon zero new homes.

“The timber frame industry is already developing the technology and building practices that will allow housebuilders to meet the targets for low and zero carbon housing because we know that the use of timber frame makes it both commercially and technically feasible,” said Bryan Woodley, UKTFA chief executive.