The British budget will have underpinned sterling on the foreign exchange markets and provided a significant boost to British business and consumers.

While the advance billing led us to expect a boring package, the 1999 budget turned out to be innovative in some areas and surprisingly generous. It has also opened up the gap between personal taxes here and in Britain - and has began to close the gap in corporation tax by cutting rates there.

The budget was far more expansionary than even the most bullish commentators had predicted, pouring an additional £4 billion sterling (€5.9 billion) into the economy.

No doubt, having seen the package, the Bank of England's monetary policy committee will be glad it did not reduce interest rates last week.

The Chancellor of the Exchequer, Mr Gordon Brown, also stuck with his optimistic economic forecasts. These will - if achieved - certainly be welcomed by many Irish firms with trade links to the UK, although importers are not likely to find any respite in the short term from the strength of sterling.

Mr Brown is forecasting that UK growth will come in between 1 per cent and 1.5 per cent this year, before taking off again in 2000 to between 2.25 per cent and 2.75 per cent. At the same time, inflation will remain on target at 2.5 per cent.

As Dr Dan McLaughlin, chief economist at ABN Amro pointed out, that means there is hardly any reason for further British interest rate cuts and thus sterling is unlikely to weaken in the short term.

One of the main surprises in the Budget was the extent of tax cuts. A new introductory rate of 10 per cent for the first £1,500 sterling of income has been introduced from April this year with the basic rate falling by one percentage point to 22 per cent in April 2000. The top rate of tax remained unchanged at 40 per cent.

Corporation taxes were also cut, with a new 10 per cent rate for small companies on the first £50,000 of profits, rising to 20 per cent for medium-sized firms and a standard rate of 30 per cent for large corporations.

These rates do not yet compete with the 12.5 per cent promised for all companies here, but they are undoubtedly a shot across the bows of German Finance Minister, Mr Oskar Lafontaine and for his bid to have European corporation tax rates harmonised.

The rate for medium-sized firms is also below our own current 25 per cent rate.

In a similar move to Mr McCreevy's last year, Mr Brown cut capital gains tax to 10 per cent and exempted the first £7,500. However, mortgage tax relief will now be abolished, although it had been gradually cut back by successive administrations and only stood at 10 per cent on the first £30,000 of interest before the budget speech.

According to IBEC director for economic affairs, Mr Brian Geoghegan, the budget will be good for the British economy.

But he also pointed out that it would increase competition in the labour market, with UK taxes now significantly below Irish rates for middle-income earners and some competition in corporation tax as the UK lowers rates.

The budget also had a very firm pro-family stance. Much of the rhetoric and indeed the measures were based on supporting families and children in particular.

The married couple's allowance was abolished and a child tax credit introduced instead, the first time since the 1960s that a British government has recognised the extra costs involved in bringing up children through the tax system. The Irish tax system has not yet gone down that road.

There were also substantial increases in child benefit which is now payable at £15 a week and, contrary to initial speculation, it is not being taxed.

Again this is significantly ahead of the Irish amounts and in line with the direction the social partners here would like Mr McCreevy to take.

Pensioners benefited significantly from a range of measures from winter payments to pension increases.

Importantly for us, Mr Brown announced a major exercise to stimulate e-commerce, signalling that Britain is emerging as one of our key competitors in this area. IBEC's Mr Geoghegan warned we would have to watch this area and make sure we remained competitive.

Overall, Mr Brown appears to have taken the road that many here would like our Government to go down.