Budget 2003: City Unmoved as Brown Looks to an Economic Bounce Back; Surprise over Revision of Growth Forecast Fails to Make the Same Impact as Euphoric Scenes in Baghdad

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THE eyes of the City remained fixed on the Gulf yesterday as the closing stages of the war in Iraq reduced the impact of Gordon Brown's Budget on the markets. In a bullish speech to the House of Commons Gordon Brown predicted a rapid economic bounce back and declared that the Government's ambitious spending plans for schools mained intact. During his address trading levels in the City were low with the FTSE 100 moving by only a few points. There were some signs during the address that it was making a small impact on market sentiment, most notably when he confirmed the revision of his growth forecast. But generally the markets were unmoved by Mr Brown's Budget and it was only when attention in London switched back to the euphoric scenes in Baghdad that the FTSE 100 saw a rise in confidence.

and hospitals re-Having barely moved during the Chancellor's Budget statement the benchmark index rose from almost 30 points below its opening mark to more than 20 points above at one point. By mid afternoon it was hovering around its opening mark.

By the close the FTSE stood at 3861.4, down 7.4. Analysts agreed that the movements were a response to the scenes in Iraq rather than the Budget.

Martin Dobson from NatWest Stockbrokers summed up the view, ``Iraq is the major news really, there is nothing of consequence that has come out of Gordon Brown's Budget statement, nothing that will move the market.''

Delivering his seventh Budget statement, Mr Brown said the UK economy would be well placed to capitalise on an expected global upturn.

He surprised some experts by saying he had shaved just half a point off his growth forecast for this year, which is now predicted to be 2 to 2.5%.

Many City analysts had been forecasting a more gloomy outlook in the Budget and they will now spend the week ahead going through the figures with a fine tooth comb to see if they stack up.

Mr Brown said he expected growth to come in at between 3% and 3. …