Chancellor Alistair Darling rose at 3.29pm to deliver the Pre-Budget Report aimed at restoring confidence in the economy.
Borrowing will rise to £78 billion this year and £118 billion next year, 8 per cent of GDP, but will eventually fall to £54 billion. By 2015/16 the Government will be borrowing only to invest.
Efficiency savings of £5 billion can be made by 2010/11.
A total of £3 billion of capital spending to be brought forward for schools, roads and energy efficiency measures.
From next Monday, VAT is to be cut from 17.5 per cent to 15 per cent until the end of next year. But since this will reduce tax on petrol and tobacco, the duty on those will be raised to maintain the tax take.
This year's increase in the income tax personal allowance of £120 a year for basic rate taxpayers to be made permanent and increased to £145 in April, helping 22 million basic rate taxpayers.
All rates of National Insurance contributions to rise by 0.5 per cent from April 2011, but the starting point for National Insurance is to be aligned with that of Income Tax.
New 45 per cent tax rate for the top 1 per cent of earners - over £150,000 - from April 2010.
From April 2010, those with incomes between £100,000 and £140,000 will see the value of their personal allowance reduced to get the same benefit as a basic rate taxpayer. For people with incomes above £140,000, the full value of the personal allowance is to be withdrawn.
To help small firms, there will be a temporary increase in the threshold for empty property relief, with empty commercial properties with a rateable value below £15,000 exempt from business rates for 2009/10.
Small businesses allowed to spread their tax payments.
£1 billion funding available for lending to small and medium businesses.
From January, £1 billion extra help for exporters.
1p increase in corporation tax deferred for small businesses.
Air passenger duty reformed into a four-band system based on distance travelled.
£100 million of new money and £50 million brought forward for home energy efficiency measures.
Ofgem to monitor link between oil and gas wholesale and retail prices.
Obligation on energy companies to produce renewables extended.
Body to be set up to monitor lending to businesses and private borrowers.
Lenders to delay repossession actions for three months.
£15 million for free debt advice.
Additional £775 million this year and next for social housing.
Extra help for workers made redundant, including increasing the limit for help with mortgage interest repayments from £100,000 to £200,000.
Extra funding for Jobcentre Plus.
New rates of car tax will be phased in and increases will be lower. In 2009, duty rates for all cars will only increase by a maximum of £5. From 2010, the maximum increase for the most polluting cars will be £30 instead of £90, with less polluting cars seeing no increase or a cut of up to £30.
Government will add 50p for every £1 saved by people on low incomes as Savings Gateway scheme is extended.
Benefit will rise from £18.80 to £20 a week from next January.
Pension credit to be increased in April from £124 to £130 a week for individuals and from £189 to £198 for couples.
State pension for a single person will rise from £90.70 to £95.25, also from January.
Every pensioner to get a £60 one-off payment, rising to £120 for a couple.