Budget '97: This is not a good Budget for business

And er ... is that it? In the end this was not quite the radical "mini maxi" Budget anticipated, nor did it deliver the degree of fiscal tightening the City and industry think necessary to dampen the consumer boom and head off further steep rises in interest rates. Certainly it wasn't the pro-business Budget promised, however you cut it.

Outside the windfall profits tax and the abolition of tax credits on dividends, which will not have any short-term impact on consumer demand, the degree of fiscal tightening in the economy is peanuts. The measures on stamp duty and mortgage interest relief ought to kill off the resurgent housing boom, but there's not much else to mop up the more than pounds 30bn of building society and insurance company windfalls.

Despite the stock market's rather confused reaction, this was not a good Budget for business. Gordon Brown's business-friendly rhetoric is not matched by the figures, which show that the great bulk of the fiscal tightening comes not from the personal sector but from companies and the City.

The reductions in corporation tax are little more than a smokescreen; the effect is to give back less than half what is being taken away through the abolition of the tax credit on dividends. The Chancellor claimed that taken together, the two measures would discourage companies from paying out their profits in dividends, helping to boost direct investment in the process.

Well, possibly, but it is by no means certain. Another very certain consequence, however, will be to raise the cost of equity capital and pensions provision at a time when borrowing costs are also going to be rising strongly to dampen down the boom. Exporters can expect little relief from the strong pound.

As for more generous capital allowances, Mr Brown is surely old enough to know that this is a measure which in practice will do very little to boost investment. There are no quick fixes here. Only a prolonged record of economic stability and low inflation will change the investment habits of British industry.

The magic wand of capital allowances can sometimes make a difference at the margin, but most of the time they don't. Their greatest benefit is to companies which are going to invest anyway. For them, better tax allowances are just icing on the cake. And for others, they all too often become just a form of tax avoidance.

Then there's the British film industry. Now here's a measure for Labour- voting luvvies if ever there was one. Unfortunately, we've been here before. Last time round the introduction of 100 per cent write-offs for films became a tax dodger's charter.

Nor was this quite the Budget of restraint we had been led to believe it might be on the spending side either. The welfare measures are paid for by the windfall profits tax, but the big surprise is in health and education, where extra spending commitments of pounds 2.2bn a year have been entered into.

Since this new spending is not offset by reductions elsewhere, or not that we know of anyway, it comes pretty close to breaching Mr Brown's pledge to stick to the previous government's spending total for the next two years. The fact that the extra money is to come out of reserves doesn't make it any better.

By opting for a four-year assessment period for levying the windfall tax, the Treasury does seem to have alighted on a reasonably balanced way of distributing the burden. The tax falls disproportionately on the electricity companies, which seems reasonable given that this is where the greatest excesses occurred. The exception is poor old BG Group, which does not deserve the battering it gets.

But then this never was going to be a good tax, however it was levied. Mr Brown and his spin doctors have been clever in massaging expectations of a fiscally responsible, pro-business Budget. He has actually delivered neither, or rather, to the extent that he has achieved the former, it has been at the expense of the latter.