For Irish investors, Mr McCreevy's Budget will go down as something of a watershed. Although some changes will have the effect of reducing a number of tax shelters such as capital allowances and BES funds, the overall thrust of the Budget package was unequivocally investor friendly.

For stock market investors the most immediate effect has been the sharp rise in share prices since Budget day. The combination of the cut of four percentage points in the rate of corporation tax and the halving of Capital Gains Tax (CGT) dramatically increase the attractions of investing in the stock market.

For private investors there was a series of changes to the investment landscape which will require detailed assessment. The salient features of the relevant

Budget changes of most interest to private investors were:

a reduction in the standard rate of DIRT to 24 per cent and an increase in the rate of DIRT on Special Savings Accounts (SSAs) to 20 per cent with the standard rate of tax due to come down to 20 per cent in coming years, SSAs have effectively been abolished;

the rate of tax on Special Investment Units and Special Portfolio Investment Accounts will remain at 10 per cent;

tax credits are to be abolished over a period of two years scrip dividends will be treated as income and taxed at an individual's top rate of tax;

changes to Capital Allowances and the Business Expansion Scheme will dramatically reduce their attractions;

the most dramatic change was undoubtedly the halving of the rate of CGT from 40 per cent to 20 per cent;

the reduction of the corporate tax rate to 32 per cent, and the stated intention of reducing this rate to 12.5 per cent by 2005, enhances the after-tax earnings of domestic business.

The combined impact of these changes will have a profound effect on the landscape for retail investment products in coming years.

The Minister has effectively levelled the playing field and we are likely to see investors reallocate their investments away from low-yielding deposits towards higher-return, high-risk investments such as company shares.

Therefore, there is likely to be a steady increase in interest in the stock market and stock market-based investments. Existing investors in the stock market will need to reassess their investments as the relative attractions of income versus capital growth have altered sharply as a result of Budget changes.

As a means of generating current income, the stock market has become far less attractive with the planned abolition of tax credits and the treatment of scrip dividends as income in the hands of the recipient. As a means of generating long-term capital appreciation, direct investment in company shares has become extremely tax-efficient.

For investors requiring income, the sharp rise in share prices combined with the fiscal changes means dividend yields are now extremely low. Financial stocks have traditionally provided a relatively high and steadily growing stream of dividends. For example, Bank of Ireland shares at a price of £10 will produce a gross yield of only 2.5 per cent.

Unless the company dramatically increases its payout, an investor paying tax at 46 per cent will find that after-tax his income yield will be less than 1.5 per cent. With the reduction in CGT, older investors in the stock market are likely to realise some of their capital gains with the proceeds reinvested in bonds and cash deposits.

For existing and new investors, shares which deliver long-term capital appreciation will be very attractive. Long-standing investors who now enjoy substantial capital gains will probably realise some of these gains and diversify their portfolios. With monetary union looming, diversification into European stocks is likely to become the norm.

As regards individual stocks, those that generate the bulk of their profits from the Irish economy are the major beneficiaries of the Budget. The most notable winners are banks. Amongst the second-line stocks, companies such as Arnotts and Jurys are also major beneficiaries of the lower corporate tax rate. However, in the long term, the market will benefit from the lower corporate tax regime and the lower burden of Capital Gains Tax.