Chancellor of the Exchequer George Osborne has announced that Britain is to cut its main rate of corporation tax to 20% from 2015.
Corporation tax is already due to fall to 21% next year.
Delivering his budget speech in the House of Commons today, Mr Osborne cut his official growth forecast in half.
He said the country's economy is now expected to grow only 0.6% this year, half the rate predicted only three months ago.
However, he insisted that the UK would avoid a "triple dip" recession.
Mr Osborne said the central bank's inflation target would remain at 2% a year, but said that was not enough.
He also vowed to stick the course on austerity.
"It is taking longer than anyone hoped, but we must hold to the right track" he said.
Mr Osborne said he was publishing a review of the Bank of England's mandate.
He also said the central bank might need to use "unconventional monetary policy instruments" and give a clearer idea of what it will do in the future.
Such instruments in the past have included printing money to buy assets as a way of pumping cash into the moribund economy.
He described today's package as: "Budget for people who aspire to work hard and get on".
The Labour opposition argues that the Conservative-led government has stuck too long to austerity, failing to provide needed growth.
Forecasts by Britain's budget watchdog showed growth was expected to pick up to 1.8% in 2014, after the 0.6% this year, Mr Osborne said.
That was also lower than the watchdog's December forecast, but Mr Osborne said UK growth was expected to be stronger than in France and Germany in 2013 and next year.
He said Britain remained on track to eliminate its underlying budget deficit within five years.
But a secondary target of stopping the rise of debt as a share of GDP would take a year longer than forecast in December, when it was also pushed back by a year.
Mr Osborne announced several tax changes, including a cut in employment taxes for businesses.
Individuals would be able to pay no income tax on their first £10,000 of income from 2014, a year earlier than previously expected.
He also cancelled a rise in fuel duty, which was planned for next autumn, and cut the price of a pint of beer by one penny.
Details of the budget were published online by a reporter at a London newspaper before the finance minister stood up to give his speech.
A copy of the front page of the London Evening Standard, containing details of economic forecasts, tax changes and borrowing, was published on Twitter at least 15 minutes before Mr Osborne rose to his feet.
Politicians have called for an investigation into the matter.