CHANCELLOR of the Exchequer Alistair Darling rose to deliver his third Budget statement to the House of Commons at 12.32pm.
Mr Darling said the Budget was taking place as the UK economy is emerging from the deepest global recession for over 60 years.
Global recession has not turned into depression, UK unemployment has not risen as much as feared and borrowing is lower than forecast last year, he said.
The Chancellor said the task now was to bring down borrowing in a way which does not damage the recovery or frontline services.
This will be a Budget to secure the recovery, tackle borrowing and invest in Britain’s industrial future. It will set out how the Government sticks to its plan to halve the deficit in four years.
The economy is at a crossroads and the Budget will set out a route to long-term prosperity with a £2.5 billion one-off growth package at its heart.
Prospects for the global economy are much more positive than a year ago, said Mr Darling. But he warned there are still uncertainties and financial markets are "febrile".
Latest figures from Northern Rock show it is returning steadily to normality and RBS is now being restructured and is rebuilding.
The Treasury has already received over £8 billion in fees and charges from banks and the one-off 50% tax on bankers’ bonuses has already raised £2 billion, said the Chancellor.
A new guarantee will mean everyone can have a basic bank account, giving up to 1 million more people access to bank accounts over the next five years.
The impact of the economic crisis has meant the UK economy has contracted by around 6% over the course of the recession.
Nearly 4 million people have been helped off the unemployment claimant count in the last year alone, said the Chancellor, with this year 440,000 families benefiting from extra help through the tax credit system.
Tax credit support for older workers is to be extended. To make it easier for those over 60 to receive working tax credit, the Government will reduce the minimum hours they need to work to be eligible.
A guarantee of a job or training for every 18-24 year-old after six months out of work is to be extended until March 2012.
The Support for Mortgage Interest scheme will continue at the higher rate for another six months. The Stamp Duty limit for first-time buyers will be doubled from midnight tonight to £250,000 for this year and next, to be funded through an increase in Stamp Duty to 5% for houses worth over £1 million from April 2011.
From next month, the annual ISA limit will rise from £7,200 to £10,200 and ISA limits will increase annually in line with inflation.
The Chancellor forecast the economy to grow by between 1% and 1.5% this year and between 3% and 3.5% in 2011. His forecast for the following years is unchanged.
Borrowing this year should be £11 billion lower than forecast. In 2010/11, borrowing will be £163 billion, falling to £131 billion in 2011/12, then £110 billion in 2012/13. In 2013/14 it will be £89 billion, reaching £74 billion in 2014/15, £8 billion lower than forecast in December.
Debt will be £100 billion lower by 2013/14 than was expected at last year’s Budget. As a share of the economy, borrowing is forecast at 11.8% of GDP this year, 11.1% next year, then 8.5%. In 2012/13 it will be 6.8%, then 5.2%, falling to 4% in 2014/15.
Mr Darling said this means a reduction in the deficit from 11.8% of GDP to 5.2%, more than halved over a four-year period, with the structural deficit estimated at 8.4% of GDP this year, falling to 2.5% by the end of the period.
Public sector net debt will reach 54% of GDP this year, increasing to 75% in 2014/15, and beginning to fall the year after that.
A policy of immediate cuts to public spending would be both wrong and dangerous and would risk derailing the recovery, said the Chancellor.
The Chancellor made no further announcements on VAT, income tax or National Insurance rates.
Duty on beer, wine and spirits will increase as planned from midnight on Sunday. Alcohol duties will also increase by 2% above inflation for two further years from 2013.
More than £4 billion from next year’s reserve will be allocated to fund operations in Afghanistan.
The next spending settlement, from 2011 on, will be the toughest for decades, warned Mr Darling.
Public pay settlements will be held at a maximum of 1% for the two years from 2011.
The number of civil servants in London is to be reduced by one-third over the long term, with 15,000 posts relocated within the next five years.
One thousand posts from the Ministry of Justice will be moved out of central London, saving £41 million.
From October next year, the most expensive properties will be excluded from the Housing Benefit calculation in each area, which will - added to anti-fraud measures - save £250 million a year.
A new Growth Capital Fund will provide fast-growing companies with private capital and will eventually provide £500 million of finance - with commercial banks so far agreeing to contribute more than £100 million.
Business rates will be cut for one year from October, meaning a tax reduction for over 500,000 small businesses in England
Small businesses will be helped to expand by doubling the annual investment allowance to £100,000.
Entrepreneurs’ relief for Capital Gains Tax will be doubled to £2 million on which the lower rate of 10% will be taxed.
To boost a low-carbon economy, the Government will set up a new Green Investment Bank, controlling £2 billion of equity. Half the cost will come from asset sales, with the rest matched by private investment.
The fund will focus on green transport and energy, including offshore wind power, with £60 million offered to develop ports hosting manufacturers of offshore wind turbines.
The Chancellor will offer help to the computer games sector similar to the aid given the British film industry.
The Government will set up a £35 million University Enterprise Capital Fund to support university innovation and spin-out companies.
A University Modernisation Fund will give a one-off funding boost of £270 million in 2010/11, creating 20,000 more university places starting this September.
The cost of the £2.5 billion overall one-off growth package will be met from existing budgets and by higher revenues from the bankers’ bonus tax.
The Budget will bring in additional tax of half a billion pounds each year, said Mr Darling.
Parents of one- and two-year-old children will be helped by increasing by £4 a week money paid through Child Tax Credit from 2012.
The pensioners’ higher Winter Fuel Payment of £250, and £400 for the over-80s, will be guaranteed for another year.
The Chancellor said he would provide £100 million to pay for vital repairs to local roads throughout the country following the recent bad weather and £285 million to pay for improvements on motorways.
The country must choose whether to support those whose policies will suffocate our recovery or a Government which has been right about the recession and the recovery, declared the Chancellor.
Mr Darling concluded his statement at 1.30pm.