Osborne's incentives for business will have magnified implications for Irish economy
George Osborne had very little wriggle room as he prepared to unveil yet another sober Budget. Against the backdrop of a worryingly fragile economy and suffering the embarrassment of having the country's prized AAA credit rating downgraded, Mr Osborne laid out a plan that he no doubt hopes will strike a balance between careful management of public spending and ensuring taxpayers don't feel the pinch too deeply.
His speech was heavy on incentives for business, with plans for a £3bn (€3.5m) infrastructure investment, a cut in corporation tax to 20pc by 2015 and incentives for R&D. The latter two moves are a shot across the bow for Ireland and follow the 10pc cut in profits from patents due to come into force next month.
The British Budget always has implications for Ireland, but in these straitened times, the ramifications are magnified. Other countries take more exports but Britain is Ireland's biggest de facto trading partner by a long way and businesses here will have been keenly watching to see how decisions might have a knock-on effect for them.
The projected cut in growth to 0.6pc this year will likely hurt Irish firms heavily dependent on the UK. And Osborne's suggestion that the Bank of England may have to use "unconventional monetary policy instruments" will potentially drive down the value of the pound with a knock-on effect for Irish exporters.
Europe also got a dig, with the chancellor announcing the aboloition of stamp duty on shares traded on the Alternative Investment Market. "In parts of Europe they're introducing a financial transaction tax," he said. "Here in Britain we're getting rid of one."
As in Ireland, the coalition is suffering in opinion polls and the Conservatives claim to be determined to tackle the country's deficit – 11pc of GDP when they took office in 2010 – in the hope that a recovery globally will kick in and help give the British economy a much needed boost ahead of the next general election in two years. The deficit is expected to fall to 7.4pc this year, and to 2.2pc by 2017/18.
Osborne originally planned to reduce the burden of public debt by 2015, but weaker than expected growth has forced him to push back that aspiration. Meeting the targets are a big ask. Any good news to come will be dwarfed by the scale of the borrowing difficulties facing the country.