Chancellor George Osborne has offered a helping hand to motorists and business in a Budget which he said would "put fuel into the tank of the British economy".
Mr Osborne took 1p a litre off fuel duty from and introduced a Fair Fuel Stabiliser, funded by £2 billion of new taxes on the windfall profits of oil companies due to record global prices.
And he announced a range of measures which he said would make the UK the best place in Europe to start and grow a business, including staggered cuts in corporation tax which will bring it down to 23% by 2014/15.
Most taxpayers will benefit from a heavily-trailed boost of £630 in the personal tax allowance to £8,105 - worth £126 a year in cash terms. Together with this year's rise, the change will mean an extra £326 a year for basic-rate taxpayers and will take 1.1 million of the low-paid out of tax altogether, said the Chancellor.
Mr Osborne's second Budget was delivered against a backdrop of deteriorating growth and borrowing figures, which Labour claimed were an indication that his cuts programme is harming the British economy.
The independent Office for Budget Responsibility downgraded its GDP growth forecast from 2.1% to 1.7% this year and from 2.6% to 2.5% in 2012. While the OBR predicted stronger growth in subsequent years, it warned: "We expect this recovery to be weaker than the recoveries of the 1980s and 1990s."
At the same time, the OBR expects borrowing over the next five years to be a total of £47 billion higher than previously predicted.
The gloomy forecasts prompted mockery from Labour leader Ed Miliband, who told a raucous Commons chamber: "Every time he comes to this House growth is downgraded... It's the same old Tories - it's hurting but it isn't working."
Labour pointed to OBR figures suggesting unemployment would be up to 200,000 higher every year than previously predicted, which shadow chancellor Ed Balls said could cost an additional £12.6 billion in benefits over the next four years.
But Mr Osborne again dismissed Labour calls for him to rein in the Government's £81 billion package of spending cuts, insisting: "Britain has a plan and we're sticking to it."