It was a weekend of governments as one laid out audacious plans to bail out the world’s biggest banking corporation while on our side of the Atlantic Chancellor Alistair Darling will announce a raft of new tax measures aimed to grease the skids for the UK economy through out 2009.

Citigroup has had a worse week than most with its share price tumbling by 60% over the past 5 days. Although no fundamental cracks are evident the ensuing lack of confidence has prompted the Federal Government to act and bolster the group’s $2 trillion of assets. Risk aversion will be the key factor surrounding this story currency wise and will lead forecasters to pontificate on the fate of the big 3 auto makers; A stronger USD would make sense.

Most of the pre-budget details due to be delivered at the ballot box today have been leaked over the weekend and business groups have been quick to criticise the relative lack of punchiness. A 2.5% cut in VAT is probably not going to sway Joe Public to buy that sofa if the 25% price slash by the retailer hasn’t already. Plans to increase the rate of tax paid by higher earners has also met consternation; a 5% tax bump in incomes over £150,000 would break a Labour party pledge from their 1997 election.

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