George Osborne: It's a budget for the workers

Chancellor George Osborne this afternoon gave families a tax giveaway, lifting personal allowances and cutting the top rate from 50p to 45p.

By lifting the tax-free allowance to £9,205, the average worker will be more than £180 a year better off – and around two million now won't pay income tax at all.

There was also a watering down of the planned changes to child benefit with a gradual reduction for people earning £50,000 or more rather than a total cut for higher tax rate earners as was originally proposed.

Click here to see: Budget 2012 - as it happened.

But there was bad news for motorists, with confirmation that the planned 3p increase in fuel duty will go ahead in August. Road tax will go up by the rate of inflation only.

Tobacco duty will rise by five per cent above inflation, the equivalent of 37p on a packet of cigarettes, from 6pm tonight.

A new gaming machines duty will have a standard rate of 20 per cent and a lower rate for low stakes and prize machines of five per cent of net takings.

There will be no increase in the cost of beer and wine.

There will be a new top rate of seven per cent on stamp duty, affecting homes worth more than £2 million.

Corporation tax will be cut one per cent to 24 per cent from next month, with further cuts until it hits 22 per cent 2014.

He signalled that millions of Britons may have to work for longer because of an automatic review of the state pension age.

The Chancellor announced plans for a single tier pension, currently estimated at £140, and based on contributions.

Mr Osborne said his measures would help lift Britain's economy out of a slump that threatens a double-dip recession.

He attempted to help the average family by lifting the income tax threshold by £1,000 from April 2013 – and said the level will rise again in April 2014 to a new level of £10,000, in a move that will save most people another £250 annually.

For top earners, the rate of income tax will drop from 50p to 45p from April next year, a move that had been called for by industry as a way of encouraging highly skilled workers to stay in the UK.

Mr Osborne told the Commons: "This Budget supports working families and helps those looking for work.

"It unashamedly backs business. And it is on the side of aspiration: Those who want to do better for themselves and for their families."

Mr Osbourne said he wanted to double the nation's exports to one trillion pounds this decade, by helping smaller firms in new markets.

And he said the budget reaffirmed the Government's "unwavering commitment" to deal with Britain's record debts.

He pledged businesses of all sizes would be provided with the modern infrastructure; new growth-friendly planning rules and employment laws and improved schools, universities and colleges to train the workforce of the future.

The Chancellor said he expected Britain's economy to avoid a double dip recession, by showing growth of 0.8 per cent this year. He said he expected the economy to grow by two per cent in 2013. Britain's deficit for this year is expected to be £126 billion, but Mr Osborne said savings introduced by the Government would reduce that figure to £21bn by 2016/17.

Mr Osborne said Sunday trading laws will be relaxed for eight weeks starting on July 22 to boost trade during the Olympics. And he revealed plans for ultra fast broadband and wi-fi in cities including Birmingham.