25th March 2011

Schroders:UK Budget: little room for manoeuvre

Azad Zangana, European Economist, Richard Buxton, Head of UK Equities,
and David Scammell, Head of European & UK Interest Rate Strategies on
the UK Budget.
In summary:
- With the chancellor still facing the unenviable task of bringing
down the UK's huge budget deficit, George Osborne had little room to
manoeuvre despite calls for more help to stimulate growth.
- The acceleration in the planned reduction in corporate tax rates is
helpful to equities and may at the margin underpin an improvement in
corporate spending, which is important to sustaining the recovery.
- The market may be inclined to infer that the government's reliance
on strong economic growth over the next few years argues for
supportive monetary policy.

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