Chancellor George Osborne has frozen fuel duty but increased VAT to 20 per cent in his first budget.
The government also plans to go ahead with plans to explore changes to the aviation tax system, including switching from a per-passenger to a per-plane duty. This has been heavily criticised as damaging to the air cargo sector.
Corporation tax will be cut to 27 per cent and will then fall by one per cent a year to 24 per cent. The small companies’ rate will be cut to 20 per cent.
The economy is predicted to grow by 1.2 per cent in 2010, rising to 2.3 next year and 2.8 per cent in 2012.