As expected the Chancellor also scrapped a planned 3p rise in fuel duty in September and said that no-one earning less than £10,000 would pay income tax from April next year.
In a dramatic move Mr Osborne also announced a new scheme to help homeowners move up the property ladder. Anyone wanting to buy a new-build home will be able to access a 20 per cent Government loan as long as they have a five per cent deposit.
But the eye-catching initiatives masked grim economic news. After just three months the Office of Budget Responsibly has cut its forecast for growth by half from 1.2 per cent to just 0.6 per cent.
Borrowing will be £61.5 billion higher than planned while national debt will reach a staggering 85 per cent of GDP and will not start falling until 2017 a year later than planned.
To pay for this Mr Osborne announced that future Government spending cuts will rise from £10 billion to £11.5 billion – but with health, education and police spending safeguarded.
Mr Osborne announced big increases in infrastructure spending in an attempt to boost the economy. He said he would use £3 billion saved from Whitehall spending cuts to fund a capital expenditure programme – but not until 2015/16.
But it was Mr Osborne’s announcement on consumer taxes that was more eye-catching. He announced that he was cutting taxes on a pint of beer by 1p and ending the duty escalator which would save 3p over the next few years.
However this will be paid for by increases in other alcohol duties. Wine will rise by 10p a bottle, spirits by 38p a bottle and cider by 2p a pint.
Mr Osborne also announced that:
£3.5 billion will be spend on interest free shared equity loans for up to 20 per cent for new build homes.
Around 450,000 small busineses - one third of all employers - will pay no employer National Insurance after introduction of a new Employment Allowance.
Corporation tax will fall in 2015 to 20 per cent – the lowest level in the industrial world.
A new crackdown on tax avoidance including naming and shaming those promoting aggressive avoidance schemes.
But there was controversy after key details of Mr Osborne’s Budget speech appeared on the internet before the Chancellor stood up.
An image of the Evening Standard’s front page was mistakenly tweeted shortly before the Budget. The paper had been given details of the statement in advance under a strict embargo and apologies for the mistake.
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