British Chancellor Alistair Darling, in his budget speech in the House of Commons, has told MPs he expects the British economy to start growing again 'towards the end of this year'.
He reduced his forecast for the British economy, saying he expected it to shrink by 3.5% in the current year. But he said the UK economy would grow by 1.25% in 2010, while retail price inflation - which includes mortgage repayments - would reach -3% by September.
Mr Darling said the UK's figures for public sector net borrowing would be £175 billion this year, 12.4% of economic output, while the country's national debt would rise to almost 80% over the next few years, lifted by the cost of supporting the banking system.
The Chancellor announced a scrappage scheme, where motorists will receive a £2,000 discount on new vehicles bought when they trade in cars over 10 years old. This will last until March 2010.
He said he would not raise tax on most incomes this year, but a planned new rate of 45% for those with incomes above £150,000 a year will be increased to 50% from April next year. Mr Darling also announced plans to restrict pension tax relief for those with incomes over £150,000 from April 2011, so it is gradually tapered to the 20% rate.
To help the UK housing market, the Chancellor extended a stamp duty holiday on properties sold for less than £175,000 until the end of the year.
Mr Darling said the British government was working with employers to create or support as many as 250,000 jobs. £260m of new money will be allocated for training and subsidies for young people to help them gain skills and experience.
The UK's fuel duty will increase by 2p per litre in September and then by 1p a litre above inflation each April for the next four years. Alcohol duties will go up by 2% from midnight tonight. There will be an increase in tobacco duty of 2% from 6pm tonight.
Retail Ireland, the IBEC group which represents the Irish retail sector, has said a decision in the budget to retain the UK's 15% VAT rate until the end of 2009 will keep the pressure on the Irish retail sector.
'Our higher VAT rate is one of the factors encouraging shopping by Irish residents in the sterling area,' said Retail Ireland director Torlach Denihan, who urged the Irish Government to consider a VAT cut.