The site of a planned major new railway station in Birmingham city centre is favourite to become the city’s first “enterprise zone”, after Chancellor George Osborne unveiled a Budget designed to boost industry.

Business leaders and councillors face the delicate task of picking a location for the zone, where new employers will be exempt from paying business rates for five years, saving them up to £275,000 each.

The Eastside area around Fazeley Street near the city centre, where a new station serving high speed rail trains is set to be built, is the top contender.

It follow’s Mr Osborne’s “Budget for making things”, which the Chancellor claimed would “put fuel in the tank of the British economy”.

He announced the creation of two “enterprise zones” in the region – one in Birmingham and Solihull and a second in the Black Country.

The exact locations will be chosen by local enterprise partnerships, the new bodies created by councils, chambers of commerce and other industry groups with the support of the Government.

Ministers hope the zones will provide a massive boost to the private sector and help industry create jobs to replace the thousands being axed in public services. A 100 per cent discount on business rates will apply to any business that moves into an enterprise zone before 2015.

Councils will also be allowed to keep any increase in business rates which comes from new employers – giving authorities, for the first time, a direct financial incentive to support industry.

Businesses will also be offered high speed broadband and councils will be allowed to suspend the usual planning restrictions allowing proposed developments to go ahead more quickly.

The aim is to create jobs in Britain’s most deprived inner-city areas, after figures this month showed the West Midlands had suffered a worse rise in unemployment than anywhere else, with 265,000 now out of work, nearly ten per cent of the working population.

But in a swipe at Labour, Mr Osborne singled out the West Midlands as a region where employment in the private sector had fallen even before the banking crisis.

He said: “Consider this staggering truth – during the boom years before the bust, private sector employment actually fell in a region as important as the West Midlands.”

The development board of Greater Birmingham and Solihull Local Enterprise Partnership, including business and council leaders, will meet this week to consider where an enterprise zone should go.

Fazeley Street is the favourite option, as placing a zone here would allow the city council to borrow money against future business rates revenue.

The authority hopes to use the money to help fund its share of the cost of building a new high speed rail station. But three other possibilities will also be considered, including a site in Tyseley.