The pace of growth in several of the major industrial economies has increased and the recovery here seems set to continue at a moderate rate. Until recently, the main contributor to stronger UK demand has been higher consumer spending associated with lower saving, to which high consumer borrowing has contributed; that may now become less important and exports and investment more important as they respond to growth abroad and the effects of the Budget.
By no means all the borrowing by the personal sector has gone to finance consumer spending and house purchase; financial assets have been built up as well. Companies have behaved somewhat similarly.
The Budget contained a number of measures of importance to financial markets. They may be characterised as welcome steps in the direction of fiscal neutrality; whether between banks and building societies or between direct and institutionalised holdings of financial assets. These, as well as monetary aspects of the Budget, are also discussed.