IT contractors working in the public sector could be hit by spending cuts announced in George Osborne's emergency Budget, but many analysts are happy with the prospects for the private sector.

The Budget was "better than expected ... unless you are a public sector employee or on benefits", according to chartered financial planner Martin Bamford.

Mr Osborne announced that the government will introduce a two-year pay freezer for public sector workers between 2011 and 2012, except for those earning £21,000 or less.

IT contractors may be a more attractive investment for private sector firms now, however, with limits imposed on national insurance (NI) increases and other measures to boost small businesses.

Mr Bamford explained: "Some of the measures to help small businesses, including limiting employer NI increases and reducing corporation tax, will make the UK private sector more attractive and hopefully boost the economy."

An NI holiday was also announced by Mr Osborne for new businesses and start-ups in particular areas of the UK for the next three years.