Osborne confirmed at the beginning of his talk that this is not a raising tax budget and that he will stick to the plan.

With regard growth, he cuts growth forecasts for next year to 2.5% from 2.6% and 2011's rate to 1.7% from 2.1%.

He said the 2011-12 deficit will be 122 billion pounds, while he expects unemployment to peak this year.

He added that the government will consult to combine National Insurance and Income Tax to simplify the taxing system to cope with the change in the economy.