THE economy will be held back without an improved broadband network and faster railway lines, First Minister Carwyn Jones said today.

He gave his reaction to today's Budget from Chancellor George Osborne, saying the electrification of the main railway line into south Wales had "disappeared’’.

The UK Government is abolishing Labour's landline tax and will instead support private broadband investment with funding in part from the digital switchover under-spend within the TV licence fee.

But Mr Jones said the market would not pay for the extension of faster internet access to the countryside and he feared rural Wales could be "left behind’’ without more money from the Government.

At question time in the Senedd, he welcomed a £360 million loan guarantee for Ford factories, including one in his own Bridgend constituency.

"But it has to be balanced against the fact that we want to make sure over the next few years that infrastructure is improved in Wales for businesses,’’ he said.

Broadband access would be as important to the economy as the building of railway lines was to communities in the 19th century, he said.

"So I'm afraid that welcome though the guarantee is, there are some major structural issues now that will affect us over the next few years that will affect businesses' ability to set up and prosper in Wales.’’ He added: "It will not help if we don't have the structure there for broadband and now don't have the transport structure either.

"Both the announcements that I referred to in the Budget speech will have a severe effect on Wales's ability to compete in the future.’’ Opposition leader Nick Bourne asked what had been done to improve relationships with the private sector in Wales, something the First Minister said he wanted to do in February.

There had been "major criticisms’’ of the Assembly Government's stance, including from the Institute of Directors which said the administration appeared "suspicious’’ of the private sector, Mr Bourne said.

He asked: "What assurance can you give to the private sector that your Government is still engaged with the private sector given the rather tardy response when you said it would be a few weeks and it's now much more than a few months that you would be setting up these new structures?’’ Mr Jones said the Assembly Government was analysing the responses of business and ministers would make a statement soon on an economic renewal programme.

He said he wanted to make it clear that Wales was "open for business’’ and a place where young people could set up businesses and prosper.