BRITISH Chancellor Kenneth Clarke's budget yesterday is good news for Irish exporters. The fiscally prudent budget is likely to keep sterling on its upward tack, while the forecast rise in economic growth will also help exporters, particularly in the consumer sector.

Mr Clarke's tax-cutting budget could also provide a pointer for his Irish counterpart, Ruairi Quinn, when he is drafting the January Budget. The Chancellor chose to cut the standard income tax rate - but not the higher rate - as well as widen tax bands. This may well be the approach decided on by Mr Quinn as he treads a path between Fine Gael demands for cuts in both income tax rates, Democratic Left wishes for a concentration on widening bands and Labour's own views.

Other tax-cutting measures announced by Mr Clarke will also widen the gap between the tax treatment of Irish and British businesses. He increased the threshold for employers' national insurance contributions - the equivalent of employers' PRSI - a move long-demanded by most business interests here. This will increase the pressure for further reductions in PRSI here next January.

Also, Mr Clarke has cut the small firms corporation tax rate by a point to 23 per cent; Irish firms pay 30 per cent on profits up to £50,000 and 38 per cent on the balance.

The budget would also mean that Britain will meet the Maastricht debt and deficit criteria in 1997 for joining European economic and monetary union, Mr Clarke said. Unfortunately for Ireland, it still looks likely that Britain will "opt out", at least initially.

During the budget yesterday sterling see-sawed around but still ended higher

Expectations for a further British interest rate rise, which have fuelled sterling's recent rise are still in place, but there may be a little weakening of the British currency in the short term. "It seems logical to expect that rate-rise expectations will be reduced slightly in the near term," said Mr Jim O'Leary chief economist at Davy stockbrokers.

Mr Brian Martin, chief foreign exchange economist at BZW in London said he was still expecting an interest rate increase on December 11th. "The budget may have called into question the need for a further interest rate tightening in the short term," he said. "So there may be a short-term consolidation in sterling. But the growth forecasts and the increase in excise duties will push up underlying inflation. I expect the Bank of England to still proceed with a further quarter point rise at the next meeting with the Chancellor."

He added that the lower-than-expected public sector borrowing forecast for next year would also be received positively. "Sterling is likely to be trading around DM2.60 at the year-end," he forecast.

Mr Clarke went out of his way to portray an image of steady economic management. The PSBR forecast for 1997/98 was lowered to £19 billion sterling from the previous forecast of £23 billion. The forecast was also lowered for this year to £26.5 billion from the previous forecast of £27 billion.

Mr Clarke forecast that the British economy would grow by 2.5 per cent this year and by 3.5 per cent per in 1997. In his summer forecast, Mr Clarke had said he was expecting growth of 3.25 per cent. The Chancellor said he expected consumer spending to be the "main engine of growth" next year, expanding by over 4 per cent, which should help Irish exporters.

British interest rate futures also pointed to continuing expectations of rate rises. Analysts said that the over-ambitious inflation target of 2.5 per cent and the fiscal austerity had sent mixed signals to the markets. The markets are now expecting a quarter point rise in interest rates by March.

However, Mr Clarke stressed that he was tightening fiscal policy in a bid to put off any further rate rises. This could mean he will be more resistant to efforts by the Bank of England to continue on its rate-rising course.

The main headlines of the budget were the reduction in the basic rate of income tax from 24 to 23 per cent and a number of other measures to lighten taxpayers' burden. But Mr Clarke, in his last budget before general elections due by next May, also included a number of tax rises, elimination of some tax breaks and reductions in public spending to pay for these give aways

"This isn't a reckless budget on either tax or public borrowing," Mr Clarke said. "I'm not going to play Santa Claus, but this year I don't have to play Scrooge either. This is a sensible budget for growing prosperity."

However, Mr Clarke did promise some spending increases in health, education and for the police.

Mr Quinn may hope to look more generous in January, but he will know that, like Mr Clarke, he cannot afford to look imprudent.