Currency Watch: Budget week is over

The dust has settled after this week’s Budget and we can safely say that, while not entirely irrelevant, the economic impact of chancellor George Osborne’s speech was fairly negligible.

We did see the Office for Budget Responsibility revise this year’s growth target higher to 0.8% vs 0.7% but this was widely expected and received little excitement.

In fact, from a market point of view, you’d have been hard pressed to realise the Budget was being delivered; maybe that’s a good thing. We’ve had far too many surprises of late to be honest.

I’m not going to pore over the details of the “granny-tax” or the lowering of the 50p tax rate – every business section of every newspaper has done that already – but I will say that it is my belief that the chancellor could have done more to help Britain’s businesses.

Fuel duty could have been cut, incentives for businesses to invest in the UK, not just set up HQs which is very different, could have made the Budget a much clearer sign that “Britain is open for business”.

Some help will come from the cut in corporation tax, but a cut in National Insurance contributions could really help SMEs as well.

Europe was never going to remain out of the limelight for long and it came barging back in yesterday with all the speed and tolerance of a bull (or bear) in a china shop.

It became very clear yesterday that it was going to be a day of negativity across risky assets, fuelled by the same fears that have been market headlines for the past two years now.

Following the fifth consecutive month of contraction in the Chinese manufacturing sector, we saw an unexpected slip in both German and the European-wide manufacturing PMI which suggested that January’s positive number was merely a blip and a multi-quarter recession in the Eurozone is more than likely.

Jeremy Cook is chief economist at World First foreign exchange