By Andy McFarlane and Emma Griffiths
Chancellor George Osborne has delivered his first Budget. Find the key points
See how the day unfolded below. Scroll to the bottom for the earliest entry.
Well, that brings to an end our live coverage of the coalition's first Budget. Expect argument to continue over the decisions announced by George Osborne. Stay up-to-date with all the fallout and analysis
George Osborne may have upset some with his Budget proposals but he's got the vote of confidence from novelty band The Wurzels for scrapping the scheduled increases in duty on cider. A statement from the West Country band, whose 1970s hits included I Am A Cider Drinker and Combine Harvester, thanks the chancellor for "listening to our advice". They had previously complained about being unfairly penalised.
Andrew writes: People are complaining about the rise in VAT but I think it is fair. Essential items are still exempt or carry a lower levy and the new rate of 20% puts us in line with the rest of Europe. It is, after all, a tax on spending so will affect most those who spend more. It's good too that the increase is delayed until next January - it gives the economy more time to strengthen as it has done in the last few months.
Shadow chancellor Alistair Darling says he fears the Budget will have a negative effect on jobs and the economic recovery. "It's not clear to me, if you take all of this money out of the economy, where all the growth is going to come from," he says.
GG writes: So... I have two artificial legs because both my legs were amputated below the knees. Do I really have to go for a medical test to prove I am disabled?
Dave Prentis, leader of the public sector union Unison, says members expected cuts but the Budget went further than expected. "The City has got off very lightly and who's paying the price? It's teachers, nurses, community support officers..."
Dot Gibson, from the National Pensioners Convention, says her organisation has been fighting for the state pension to be pegged to earnings for 31 years but Mr Osborne's restoration of the link is "still not good enough". The convention wants it to be set above the poverty level - 60% of median population income. "There are billions for bankers and peanuts for pensioners," she says.
British Retail Consortium director-general Stephen Robertson says his members did not want a VAT increase. "It'll hit jobs, consumer spending, the pace of recovery and add to inflation," he says. But he adds: "We accept the government has no easy options."
Labour MP and former Bank of England economist Rachel Reeves says George Osborne has "chosen to ignore the harsh lessons from history" from Japan in the 1990s and the US in the 1930s. "Despite his talk of a plan for growth, we are now facing... the very real prospects of a double-dip recession," she adds.
Ratings agency Fitch says the Budget should "materially strengthen confidence" in UK public finances - and the country's AAA credit rating - if delivered upon.
British Chambers of Commerce director-general David Frost says the government's "decisive moves" to cut the deficit will boost business and investor confidence. "The chancellor's message that Britain is open for business will be welcomed by companies the length and breadth of the country, and across the globe," he adds.
4jems4me writes: I think it's a very fair Budget. I have four children and to date have received a very small amount of child tax credit which I will now lose. I accept this and expected it. To be honest, it was more hassle filling out the forms and I'm quite glad to be relieved of the job. Whilst the money was nice, it wasn't such an amount that has left me crippled.
Labour leadership contender Ed Miliband says the government's figures reveal the measures taken will increase unemployment by up to 60,000. Justice Secretary Ken Clarke retorts that Labour had "no proposals whatsoever" to deal with the deficit.
Keith writes: The only two things that directly affect me are the VAT increase and the income tax personal allowance increase. I was expecting both so it isn't much of a surprise. With regards VAT, I can reduce the impact of this by reducing expenditure on non-essential consumer items and anyway the extra £200 I get back from the income tax changes offsets this nicely. Overall, I am pleased with this Budget but then I don't work in the public sector or receive a single penny in benefits.
"The Budget Red Book reveals working-aged people in social housing could be moved out of larger properties if they no longer need the space," says the BBC's Ross Hawkins. "From 2013 housing entitlement will 'reflect family size'. This could see parents of grown-up children required to find smaller properties once those children leave home."
BBC political correspondent Ross Hawkins has been examining the fine details of the Budget. "Jobseekers will see their housing benefit cut to 90% of their initial award after 12 months of claiming Jobseeker's Allowance," he says. "The change will be introduced in April 2013, and directly links the level of housing benefit to jobseeking for the first time."
Global economic organisation the OECD describes the Budget as "courageous". Secretary-general Angel Gurria says: "It provides the necessary degree of fiscal consolidation over the coming years to restore public finances to a sustainable path, while still supporting the recovery."
Institute of Directors director-general Miles Templeman describes the capital gains tax hike as a "tolerable compromise", acknowledging that it would have been politically unacceptable not to raise the rate. He says George Osborne's Budget was "bold and decisive", adding: "Knowing that the public finances are being brought under control is one less worry for companies and will also help long-term interest rates and business investment."
Adam from Sussex writes: This Budget does nothing for business. We supply to the public sector and after two years of difficult times we are very unsure how we can continue in the face of these dramatic cuts. This will mean redundancies for our staff. The cuts should have been phased in when economic recovery was secure.
Green MP and party leader Caroline Lucas says the Budget was an "ideological choice" - taking a "swinging axe to public spending" which could put Britain back into a double-dip recession. VAT is the "most regressive form of taxation" she says - although she admits there are a "few positive points".
Shadow justice secretary Jack Straw says the Budget was "optional", not an "emergency" Budget. He says it "runs counter" to what many are saying - including US President Barack Obama. Public spending cuts will lead to really serious reductions in people's standards of living, he adds. But the Tory former chancellor Lord Lawson says that is "nonsense" and Mr Osborne has "grasped the nettle".
Telegraph sketch writer Andrew Gimson says his take on events is that "Prudence is back" - having been "thrown away" by Gordon Brown. Meanwhile Anne Longfield, of family charity 4Children, says it's a mixed bag. Some will be relieved that child benefit is staying, but there are "blows" too - like for families on more than £40,000, she says, who are not affluent.
The increase in VAT would be unnecessary if Britain wasn't sending so much money to Europe, UKIP's Lord Pearson says - suggesting it is being spent, among other things, on French cars. The peer then raises a smile by saying his own response is "predictable".
Maggie from Chester writes: I own three houses and I am hoping to sell two so that it will pay the interest only mortgage. I'm 61 and I still owe £70,000 and the changes to capital gains tax have made it harder for me to pay off my mortgage now. I just hope they don't repossess my house.
UK Independence Party leader Lord Pearson says it's "surreal" that the chancellor can get through a Budget speech without even mentioning the cost of Britain's EU membership. "I would say that, wouldn't I," he acknowledges. He says it simply doesn't make sense to make the British people suffer - without giving them the option of leaving the EU.
The public sector pay freeze will be seen as a pay cut by midwives, says Jon Skewes, director of employment relations at the Royal College of Midwives. And it will do nothing to encourage more people into the career, he argues.
The Budget's green credentials - or otherwise - have failed to impress Simon Bullock of Friends of the Earth. He says the chancellor has failed to take the "bold decisions we so urgently need" to build a green economy. He also would've preferred more taxes on planes and banks to the VAT rise. Ben Stafford, of the Campaign to Protect Rural England, says Mr Osborne had "relatively little to say on the environment".
Will the economic benefit of reassuring the markets and lower interest rates be offset by a slowdown in economic growth or, worse still, a double-dip recession?
Read Nick Robinson's blog
Cabinet Office minister Francis Maude says he cannot "guarantee an economic trajectory" but Mr Osborne's measures make a double-dip recession "less likely". There were "no plans to raise VAT" he says - but all parties had said they could not rule it out. The reality was, there was no alternative, he says.
As the BBC's Jon Sopel tries to present coverage from College Green, he struggles to make himself heard over a man with a megaphone. BBC News Channel chief political correspondent Laura Kuenssberg, who's in the quieter surrounds of the Houses of Parliament, says one Lib Dem MP has told her the Budget will not break the coalition - but he will not vote for it. The VAT rise will be a point of tension, our correspondent says, particularly as the Lib Dems campaigned against it.
It is quite clear, from the forecasts in the Budget book, that the economy will now be operating with spare capacity for longer than we thought - in the parlance, there will still be a positive output gap in 2014/15 because the recovery, over this period, is expected to be a bit weaker than we thought.
Read Stephanie Flanders' blog
The gloves have come off in the Commons where the Lib Dems are getting some grief from Labour MPs. Mary Creagh calls them "wolves in sheeps' clothing". Barry Gardiner denounces them as "Quisling apologists". Meanwhile Conservative John Redwood says Harriet Harman's Budget response was "disgraceful".
What's the business perspective? Richard Lambert, from the CBI, welcomes the Budget and says Mr Osborne has "achieved his twin objectives of setting out a credible plan for the public finances and producing a convincing growth strategy for the longer term". He sums it up as the UK's "first important step on the long journey back to economic health".
Shadow education secretary - and Labour leadership contender - Ed Balls denounces what he calls a "deflationary Budget". He says the economy must grow and jobs must be created to get the deficit down. "This is a profound, profound mistake" he says, adding it goes back to the "economics of the 1930s". Battling against some background noise on Westminster's College Green, he says the Budget is deeply unfair.
Mrs Vee writes: Weak, weak, weak. If this is supposed to be tough, then it is abundantly clear to me that my idea of tough and Osborne's idea of tough are very different. The deficit will slowly come down but the overall debt will still continue to rise for the next five years. He could have done so much more, but it looked like he didn't want to frighten the horses. Like I said, weak.
"If business thinks that interest rates are staying lower for longer, if they think the government's finances are now more stable, then they will do what the chancellor is desperate for them to do - which is to start investing more," says BBC business editor Robert Peston. Initial reaction has been positive, he says, but adds: "This is a pretty high-risk strategy."
Karen writes: A good Budget, yes, there were tax rises but what could he do? Labour spent all the money.
The market reaction to the Budget seems fairly rational: a rise in the price of government debt; a fall in sterling; a drop in bank share prices; and a modest fall in some retail shares.
Read Robert Peston's blog
The Scottish National Party's Westminster leader, Angus Robertson, says the Budget contained recognition by the government that there is no "level playing field" in the UK and that there is "no competitive advantage in Scotland or Wales". "I'm very hopeful we'll have a maturing debate about more powers in financial structures being devolved in the UK; we need that to be able to compete," he adds.
Triona from Putney writes: I really hope that despite being protected, the spending in the areas of healthcare and education is equally closely analysed. Find the wasted money, overstaffed offices and extraneous procedural costs and get rid of them. I would hate to think that despite reform in other spending areas, the gross misuse of taxpayers' money in these two regions continues. Protecting these two areas is a noble decision but only worthy if they are streamlined and the money makes it to frontline staff and services.
Plaid Cymru's Westminster leader Elfyn Llwyd says the Budget contained some "very good stuff" in relation to corporation and income tax but that he was "very worried" about "ordinary, vulnerable people" with changes to benefits such as disability living allowance. They are likely to bear the brunt of the changes, while bankers avoid any tax on bonuses, he says.
Henry from Liverpool writes: The VAT increase will be seized on by gas and electricity companies as a way to hike the price of domestic energy. Expect to see increased fuel poverty among the elderly and the unemployed. This is hardly hitting high spenders as people are obliged to pay the same VAT on fuel in a one bedroomed flat regardless of income. There is no protection from the energy companies. The VAT on fuel is just like the poll tax.
Robert Chote, director of the Institute for Fiscal Studies, says the great uncertainty is the quality of public services we are going to get once the spending cuts have been imposed.
Mary Monfries, a tax partner with accountancy firm Pricewaterhouse Coopers, says businesses will welcome the reduction of the headline rate of corporation tax and some "imaginative" job creation tax breaks. However, she says there will be mixed views on capital gains tax reforms. Some will think it could have been a lot worse, while others will be very concerned, she adds.
Memphis from Stockport writes: John form Pembrokeshire wrote about housing benefit being reduced to £400 per week - which is £1733 per month. You can rent plenty of 3, 4 and 5 bed houses all over the UK for less than this. The average in the northwest is £600 per month or £139 per week!
, Will Heaven writes: "David Cameron was carefully placed behind the chancellor, and - on TV at least - was as absent as a World War I General in the trenches."
Read the Telegraph
BBC political editor Nick Robinson suggests government charts showing higher earners shouldering a greater proportion of the burden of the Budget's effects are an "illusion" because poorer people are more likely to rely on the public services that will be cut. Chief Secretary to the Treasury Danny Alexander accepts that the figures cover income but not changes to departmental spending to be decided in the autumn.
writes: "The Corporation Tax cut will probably bring in more money than the current rate does now, something Harman clearly could not grasp. While VAT is irritating, booze and fags are protected, not that they could have gone up much more. A council tax freeze was long overdue."
Read Guido Fawkes' blog
Mr Alexander says people on higher incomes pay a greater share of VAT and that measures have been set out to help the low-paid. He suggests the alternative to raising VAT was to cut an extra 14% from departmental budgets.
Chief Secretary to the Treasury Danny Alexander justifies the VAT rise by telling the BBC's Huw Edwards that since the election there has been a shift in international opinion towards tackling the deficit more quickly.
Government departments are looking at additional cuts of £17bn a year by 2014-15. In his speech, Mr Osborne said that this would mean a cumulative cut for unprotected departments of 25%, compared to a cut of 20% under Labour's plans.
Read Stephanie Flanders' blog
Brian Webb tweets: Just got rinsed by the chancellor and lots not to be happy with but will do my bit to pay debts of failed past. .
Read Brian Webb's tweets
Lib Dem MP Tim Farron tells the BBC he did not come into politics to enforce a rise in VAT but that there was no choice other than to vote through the Budget, or else the country's economic situation would worsen.
Sue from Tyne and Wear writes: I agree with everything Ms Harman has just said regarding Lib Dems. I voted for them and feel that my vote was wasted on a party who have turned against their values and morals. Betrayed!! What is going to happen to the poor?
An early indication of market reaction to the Budget. Sterling has risen slightly against the euro and the US dollar.
Cliff from Westbury writes: Sad to hear Harriet Harman crowing like a child about the VAT increase. They would have done exactly the same, and everyone in Britain knows it. Great to have a chancellor who actually seems to understand the concept of balancing the books once more.
John from Pembrokeshire writes: Reducing housing benefit to £400 is going to make thousands of people homeless. Where can you rent a three or four-bedroom property for that sort of money? This government is an absolute disgrace - they have hit the poorest and most vulnerable the hardest.
There will be plenty for everyone to pore over in this Budget for months and years to come - but no-one can accuse the chancellor of lacking courage in his conviction, says BBC economics editor Stephanie Flanders.
Read Stephanie's blog
TUC general secretary Brendan Barber says: "This Budget was economically dangerous and socially divisive. The one thing we can now say is that we are very definitely not all in this together."
Labour is arguing the scale of the cuts isn't necessary and says the Budget is driven by right-wing ideology, not necessity. As anticipated, to Labour cheers, Harriet Harman attacks the Lib Dems with more passion than the Conservatives, calling them a fig leaf for cuts. She is particularly harsh about the Business Secretary, Vince Cable, who says his heart beats "on the left". But Ms Harman is only the party's interim leader. Each of Labour's leadership candidates is likely to be quizzed in coming months over what they would cut - as all parties agree the deficit has to come down.
"A reckless Budget which pulls the rug out from under the economy" is how Harriet Harman sums up Mr Osborne's plans as she rounds off a vigorous attack.
Ms Harman turns her fire on the Lib Dems, asking: "How could they support everything they stood against? How can they let down everyone who voted for them?" She jokes that Business Secretary Vince Cable has transformed in a few weeks "from national treasure to Treasury poodle".
So this chancellor, like his predecessors, had a rabbit to remove from his Budget hat. He ended his speech with a pledge to link pensions to earnings, or prices, or by 2.5%, whichever is higher - and a £2bn supplement to tax credits for low-income families.
Read Nick Robinson's blog
"This Budget is not driven by economics; it's driven by ideology - their commitment to a smaller state," says Ms Harman.
Tony Blair's former spokesman Alastair Campbell tweets: Oh what a shock! VAT rise Labour and Lib Dems warned George would bring in. Cleggy and Danny looked a bit sick there.
Read Alastair Campbell's tweets
"The VAT rise makes this a Budget of broken promises," roars Ms Harman. She reminds Conservative leader David Cameron of pre-election quotes stating he had no plans to increase the tax, and the Lib Dems of their "Tory VAT bombshell" poster.
If the government's theme was ensuring "fairness", Labour is going to argue the Budget will have the exact opposite effect. Ms Harman reels off exactly who she thinks the Budget will treat unfairly: pensioners, children, the English regions and the poorest in society.
Yanall tweets: Harriet Harman says it is bad for jobs, 10s of 1,000s out of work. Rubbish. Millions will lose non-jobs.
Read Yanall's tweets
The proposed spending cuts are "the equivalent of putting every man and woman in Coventry out of work", says Ms Harman, adding that the Budget will hit the private sector as well as the public sector.
Harriet Harman delivers Labour's official line that the Budget does nothing for growth - the most pain-free way out of debt. But she is also going hammer and tongs for the Lib Dems for doing things which they had campaigned against, says Iain Watson. Expect more fire to be trained on Nick Clegg's party than on the Conservatives from the opposition benches.
Acting Labour leader Harriet Harman is on her feet and straight on the offensive: "Today's budget is bad for jobs and that will make it harder to cut the deficit," she says.
It took 55 minutes for George Osborne to rattle off his first Budget as chancellor. It will take many more hours for analysts to work out exactly what it means for the country.
The chancellor ends where he began - an attack on Labour's legacy, but also arguing that he has protected the vulnerable, including pensioners, says Iain Watson. It's been a dramatic Budget delivered in a relatively short time - less than an hour to set out the plan for the next five years
With this Budget, the government has "had to pay the bills of past irresponsibility... relearn the virtue of financial prudence," says Mr Osborne, as he rounds off his speech.
The child element of child tax credit will rise by £150 above inflation next year, says Mr Osborne.
The link between the basic state pension and average earnings is to be restored from next year, the chancellor says.
Mr Osborne describes the coalition government as "a progressive alliance governing in the national interest"- to jeers from the opposition benches.
The increase in the income tax threshold is crucial for the Lib Dems in return for support for a VAT increase - this was a key plank of their manifesto, says Iain Watson. The fact that any benefit will be clawed back from higher rate taxpayers means the government can argue that the poorest - or at least the poorly paid, rather than those on welfare - will be protected from the worst of the cuts.
The higher rate income tax threshold will remain frozen to 2013/14, with a long-term objective to increase the personal allowance to £10,000 - that was one of the Liberal Democrats' key election pledges.
The tax-free personal allowance on income tax will be increased by £1,000 in April, giving 23 million people up to an extra £170 per year and taking 880,000 out of the tax system altogether, the chancellor says.
Good news for cider drinkers but many other goods will cost more due to the VAT increase, says Iain Watson. Lib Dem deputy leader Simon Hughes previously criticised any VAT increase as "regressive". But the Lib Dems' policy on aviation taxation is likely to be adopted and the chancellor is going at least some way to satisfying Lib Dem demands for an increase in capital gains tax.
The 10% capital gains tax rate for entrepreneurs - which currently applies to the first £2m in qualifying gains - will be extended to the first £5m.
From midnight, higher-rate taxpayers will pay 28% on their capital gains.
Good news for cider drinkers. Labour's planned increase in duty has been scrapped.
There will be no new increases in duties on alcohol, tobacco or fuel, Mr Osborne says. He adds that he will report back in the autumn on possible health-related measures on alcohol and on the possible per-plane, rather than per-passenger, levies on flights.
Uproar on the opposition benches over the VAT increase. It's a big rise but delayed to help stimulate spending during the rest of this year, says Iain Watson. It's also challenging for the Lib Dems, who campaigned against a Conservative "VAT bombshell" during the election campaign but now have agreed jointly to detonate it in government.
Anyone who sets up a new business outside London, the south-east and east of England will be exempt from £5,000 of National Insurance contributions for each of first 10 employees they hire, the chancellor announces.
VAT is to rise from 17.5% to 20% from 4 January next year, the chancellor announces.
A bank levy is likely to be one tax which is popular - though perhaps only outside the City of London, says Iain Watson. The chancellor can say Labour would have fought shy of this measure without prior international backing. It will also help him argue that bankers - and not just benefit recipients - will shoulder some of the burden of deficit reduction
A duty on landline phones, proposed by Labour with the aim of funding universal broadband internet access, is to be scrapped, the chancellor confirms.
From January 2011, a levy will be imposed on UK banks and the UK operations of foreign banks which will generate more than £2bn in annual revenue. The French and Germans have also agreed to impose levies, George Osborne says.
Mr Osborne is planning to "over-achieve" his target of balancing the structural current deficit by 2015/16. The forecast is for a surplus on the structural current deficit of 0.8% in that year, which is roughly the margin for error that Mr Darling used to employ. That is probably why the OBR can say they have a more than 50% chance of hitting their goal.
Read Stephanie Flanders' blog
Corporation tax cuts are quite modest - the right of the Conservative Party would have liked to see the tax cut overall to 18 or 20%, not just 24% over four years, says the BBC's Iain Watson. Meanwhile, Labour will say that specific allowances for investment are more important than a headline tax cut.
Small companies' corporation tax will be cut to 20% next year, says the chancellor.
Corporation tax will be cut by 1% per year for four years from next year, bringing it down to 24%, while the employers' National Insurance threshold is to rise.
Housing benefit will be limited to a maximum of £400 per week for a four-bedroom house under radical reforms, Mr Osborne says.
Freezing child benefit for three years will be portrayed by the opposition as hitting the poorest hardest, but George Osborne has resisted pressure to tax or means test the benefit, says Iain Watson. This might cut across the work of Labour's former welfare minister Frank Field's work on child poverty, commissioned by the coalition government
A medical assessment will be applied to new disabilities living allowance claimants from 2013, says Mr Osborne.
Child benefit will be frozen for the next three years, says the chancellor.
"We will expect lone parents to look for work when their youngest child goes to school," says Mr Osborne.
From next year, with the exception of pension and pension credit, benefits, tax credits and public service pensions will rise in line with consumer prices rather than retail prices - saving over £6bn a year by the end of the parliament, the chancellor says.
"It is simply not possible to deal with a budget deficit of this size without undertaking lasting reform of welfare," says Mr Osborne.
A two-year pay freeze public sector pay freeze is twice as long as was envisaged before the election, though only for those on incomes over £21,000. This is, however, less than the four-year freeze that had been discussed privately, says Iain Watson.
There will be a two-year pay freeze for public sector workers, says Mr Osborne, although the 1.7 million lowest paid will get a flat £250 pay rise.
The image of spending and benefit cuts being unveiled and VAT hiked by a Tory chancellor with two Lib Dems nodding in agreement will define politics for a long time to come.
Read Nick Robinson's blog
freezing cash for the Royal Family - via the civil list - is designed to underline the government message that "we are all in this together", says Iain Watson.
Expenditure on Royal activities through the civil list will remain static at £7.9m a year, says Mr Osborne. It will be scrutinised by the National Audit Office in future, he adds.
George Osborne will please business by not making steeper cuts in capital spending - this will be seen as helpful for job creation in the construction industry - but this means probably deeper cuts elsewhere, Iain Watson says.
There will be no further reductions in capital spending in this Budget, Mr Osborne says, explaining that he has learned lessons from government actions of the early 1990s.
Current spending will rise to £711bn in 2015/16, thanks largely to a rapidly rising bill for debt interest, which Mr Osborne calls "the price of economic failure".
Perhaps the easiest cut of all - getting rid of a Treasury unit to prepare for joining the euro, which both coalition partners have already said they will not seek to do in this parliament, says the BBC's Iain Watson. Expect rather more challenging cuts to follow.
Public sector net debt will start to fall by 2014/15, thanks to today's actions, Mr Osborne says.
The coalition believes that the bulk of the deficit reduction must come from lower spending rather than higher taxes, Mr Osborne confirms. Research shows, he says, that spending cuts are a more effective way of reducing the deficit.
The government is planning for a sustainable private sector based on economic growth, rather than "pumping the debt bubble back up", says Mr Osborne.
The chancellor is going further than the pre-election promise to eliminate the "bulk" of the structural deficit, the BBC's Iain Watson says. He now says he is aiming to balance the books by the end of the parliament. This signals that steep cuts and tax rises are due to be announced.
"In this parliament we will ensure that debt is falling as a percentage of GDP by 2015/16," says the chancellor.
The chancellor argues that his austere Budget is "unavoidable". His strategy is to argue that this is a Budget made necessary by Labour's failures and is not an ideologically driven project to slash the state, the BBC's Iain Watson says.
Mr Osborne says everyone will be asked to contribute to reducing the deficit and that everyone will "share in the rewards when we succeed".
"I'm not going to hide hard choices from the British people or bury them in the small print of the Budget document," says the chancellor.
"Early, determined action has earned us credibility in international markets," says Mr Osborne - referring to scrapping what he calls Labour's unfunded spending commitments.
Labour had "no credible plan" to reduce the record deficit, says the chancellor. Questions are being asked about the credibility and liquidity of the government, he adds.
Among those spotted in the Commons public gallery is Lord Lawson, Margaret Thatcher's former chancellor. What will he make of his successor's plans?
Mr Osborne is on his feet and says his Budget will deal decisively with the country's record debts. "It pays for the past and plans for the future," he says.
I'm hearing the Budget will be very detailed and more than an hour. Osborne to explain why not cutting some benefits, as well as why changing others, the BBC's Laura Kuenssberg tweets.
Read Laura Kuenssberg's tweets
George Osborne enters the Commons chamber and is about to deliver the coalition's first Budget.
Linda Yueh, economics fellow at Oxford University, says it's going to be difficult for George Osborne to achieve his ratio of 80% spending cuts to 20% tax rises, especially when he has to "bring the whole country with him". However, if the deficit reduction plan is credible, sterling should strengthen and more people will be willing to invest in this country, she adds.
The Commons is absolutely packed, with just about 10 minutes to go until George Osborne begins his Budget speech.
Bob Crozier tweets: Everyone knows the measures in this budget are the result of Labour's buy now, pay later ways. It can't go on like this.
Read Bob Crozier's tweets
Jeff from Durham writes: I'm not losing any sleep over it personally. Time will tell, but I think they have filled us with dread as to how bad it's going to be so that when it happens we'll be saying: "That wasn't so bad after all." This way, the coalition gets off to a decent start in terms of popularity.
"It's going to be eye-watering," says BBC political editor Nick Robinson. "[The government] will try to say that all suffer equally," he says, adding that for the first time the Treasury has prepared a document showing the Budget's effects on the population by income group - with the highest earners hit hardest.
Ryan from London writes: Okay, have stocked up on cigarettes and drinks. Bought the kids clothes for the next two years and stocked fridge and freezer with VAT-free basics. Go ahead George... let's see what you've got for us.
I've taken a fairly close interest in around 30 Budgets. I've also spoken to others who've worked on or observed 40 or 50 of them. And all of us reckon that today's Budget will be pretty unusual, in that it will combine big changes to the path of public spending with sweeping tax reforms, says BBC business editor
"This is not a day for ministers to go around looking jolly," remarks the BBC's Laura Kuenssberg, looking at the sober expressions of the Treasury team. They know, she says, that many of their decisions will be unpopular among the electorate.
During questions to Nick Clegg, Labour's Alun Michael is giving us a taste of how the opposition will react to the Budget by blaming the Lib Dems for specific cuts. Meanwhile Hazel Blears opens Labour's second front - saying the Lib Dems said one thing before the election, and are doing another in government.
George Osborne steps out of 11 Downing Street carrying the red box. At his side is the Lib Dem Chief Secretary to the Treasury Danny Alexander. Serious expressions all round.
"We've just been given some words from George Osborne. The chancellor says the Budget will protect children and pensioners," says the BBC's Laura Kuenssberg. "'This government will take responsibility for balancing the books within five years'." That gives an indication of how much further this government intends to go than Labour had planned, adds our correspondent.
Michael Findlay tweets: I hope that VAT won't rise too much. It could hit smaller non VAT-registered enterprise.
Read Michael Findlay's tweets
Prime Minister David Cameron is already in his Commons seat, chatting to Nick Clegg, who is handling his first deputy prime minister's questions session.
Nick Clegg says he doesn't think "anybody will quibble" with the principle that votes should carry equal weighting, no matter where in the UK people live. His answer, referring to plans to equalize the size of constituencies, is accompanied by the sound of much quibbling from the opposition benches.
Lib Dem cabinet minsters were tight-lipped when leaving this morning's meeting - unlike many of their Conservative counterparts who talked about the need for cuts. The Lib Dems' most senior whip Alistair Carmichael was in Downing Street this morning, the BBC's Iain Watson says. The government would have been anxious to find out how serious spending cuts are likely to be received by Lib Dem backbenchers
Paul Walsh from Stockton writes: People are worried in case there's going to be a shock in store with the Budget. Surely we all know that it isn't going to pleasant and we must all know it's going to be a hard-hitting Budget, not only because of the deficit, but also because it's the first Budget of the new parliament and this is when new governments can bury bad news - it can only get better from here!
MPs have filed in to the Commons for deputy prime minister's questions, where Nick Clegg is asked about his electoral reform plans. He says a proposed referendum will go ahead.
Ian Visits tweets: Dear George, please put a punitive tax on skycopters hovering over places and drowning out the news broadcasts.
Read Ian Visit's tweets
Sarah Cooper tweets: What will today's Budget bring? Increased VAT, decreased Corp tax...? Hopefully positive steps to get us back on track.
Read Sarah Cooper's tweets
One of George Osborne's predecessors as chancellor, Lord Lamont, says the deficit reduction plan of 80% cuts to 20% tax rises will be a "difficult thing to achieve". "But if you've spent too much, there's no option but to spend less," he adds.
Labour MP Keith Vaz accuses the coalition of releasing titbits of information ahead of the Commons Budget statement. "This is a very odd Budget because most of it seems to already be in the newspapers," he says.
Less than 15 minutes until Nick Clegg makes his despatch box debut at deputy prime minister's questions. He left Downing Street for the Commons a moment ago.
The BBC's Laura Kuenssberg tweets: Cabinet breaking up now - interesting, Norman Lamb and Alistair Carmichael, two key Lib Dems not in the cabinet, were in Downing Street too.
Read Laura Kuenssberg's tweets
No sign yet of George Osborne emerging from No 11 Downing Street with that famous red box. Let's hope there've been no accidents with that 150-year old briefcase. It is a tad fragile these days.
Rob Ford tweets: Today we see the real ConDemNation. I fancy people will be shocked how much the cost of living is about to rise and services slashed.
Read Rob Ford's tweets
Former Prime Minister Gordon Brown will not be in the Commons to respond to any Tory and Lib Dem accusations of irresponsibility. Instead, he's visiting schools in his Kirkcaldy and Cowdenbeath constituency, having promised to focus on local matters for a few months.
writes: "I don't know why George Osborne is bothering to go to the Commons to deliver his Budget this afternoon. After all, thanks to the leaks to broadcasters and the press we more or less know what is in it. I had hoped those sorts of leaks would have disappeared when Labour left office. It appears not."
Read Iain Dale's blog
Education Secretary Michael Gove promises George Osborne has been "guided by a desire to be as fair as possible" in drawing up the Budget. "[He] has been dealt a very, very difficult hand by the last government. They were stupendously irresponsible with the public finances and in difficult circumstances he's done a very good job in making sure that we can get this country back on the right road for recovery," adds Mr Gove.
Francis Maude is staying tight-lipped about what was said during this morning's cabinet meeting, from where he's just rushed to speak to the BBC. However, he describes the mood as "serious" - reflecting the task facing the government.
Cabinet Office minister Francis Maude says the Budget has been written with a "lot of input" from across the government. Criticising Labour's Tony Blair and Gordon Brown, known to have had their difficulties in working together, he adds that it is a "constitutional novelty" that the current PM and chancellor have been keeping each other informed of their activities.
Can David Cameron's "Big Society" be implemented at the same time as reducing the deficit and cutting back the state? In the Times Rachel Sylvester isn't convinced, while Danny Kruger argues in the Financial Times that it just needs some intelligent policies.
Read our round-up of comment and analysis.
Former Conservative cabinet minister John Redwood says he agrees with Labour that the government should do nothing to put the economic recovery at risk. Where the opposition has it wrong, he says, is that it doesn't recognise the need for cuts to encourage growth. Labour's Margaret Hodge says the "speed and depth" of cuts worry her.
The cabinet's Budget meeting, at which George Osborne has been outlining his plans to his coalition colleagues, has finished.
Writing in the
, Mary Riddell warns of the effect of the Budget on young people and British society. She writes: "This Budget risks tearing society apart. Economic interests and human instincts alike decree that we must create a secure destiny for our children and their children. And yet, bizarrely, the chief targets of the coalition's economic policy are the young."
Read the Telegraph
Acting Labour leader Harriet Harman voices her party's concerns about wielding the axe on government spending. "We do need to get the deficit down, but it mustn't be brought down in a way that pushes the economy back into recession and which costs jobs, because if that happens that will make the deficit worse," she says.
, William Hartson offers readers 10 things you didn't know about the Gladstone Budget Box, to be used today for the final time after 150 years. He writes: "Gladstone was originally a Conservative MP before becoming a Liberal prime minister, so perhaps it is appropriate that its final use should be by a Conservative-Lib Dem coalition."
Read the Express
So, anyone running a sweepstake on how long the chancellor will be on his feet today? In March, Alistair Darling spent an hour rattling off his pre-election Budget - well within the usual Labour-era span of 50 to 70 minutes. The longest in recent history was Norman Lamont's epic of one hour, 53 minutes in March 1993. But let's hope Mr Osborne isn't planning to break the record - that of William Gladstone in 1853, which stands at four hours and 45 minutes. It would take a lot of popcorn to get through that.
For weeks, my hunch was that the Tories would do all they could to avoid a rise in VAT. But expensive promises to give poorer workers an income tax cut, plans to ameliorate today's bitter medicine with schemes designed to protect the elderly, poor and children and moves to cut corporation tax and cut the rise in National Insurance for businesses may mean they simply need the money.
Read Nick Robinson's blog
, Sean O'Grady discusses the impact of the Budget on the public sector. He writes: "The choreographed process of softening up for today's Budget has been skilful; barely a day goes by without another grim warning about the dangers to the nation from the build-up of debt, and with it a new round of cuts. Britain is the new Greece, we are told. We need to act, and now."
Read the article.
The former director general of the CBI business organisation, Lord Digby Jones, says today's Budget should give a "dose of reality" to public sector workers, with pay freezes and pension reform in the offing. However, the former business minister - now an overseas ambassador for UK trade - says it's important that businesses and City executives share the pain if the measures are to be acceptable to the country.
Ahead of the Budget, Nick Clegg will take his first turn at the Commons despatch box during the new deputy prime minister's questions at 1130 BST. It could be a baptism of fire, too. Not only will he face a grilling from the Labour opposition; the commentators will be watching closely for any signs of dissent within his own ranks.
The word "fairness" has been bandied about by politicians of all shades since the build-up to the election. But Labour MP for Stretford, Tony Lloyd, argues it "simply won't be fair" if the government raises VAT. "People like pensioners who don't pay income tax will simply pay more," he argues.
If you fancy putting yourself in George Osborne's shoes - well, not literally - then take a look at our
It lets you choose the spending areas you'd like to cut, and by how much, before totting up how much you would save the economy if you were chancellor.
The chancellor has some support for his spending cuts, if an
ICM poll in the Guardian
reflects the national mood. Nearly three-quarters of voters would prefer cuts to tax rises, it suggests.
Mr Osborne has been hammering home the message that the country would be on the "road to ruin" if he failed to take the knife to public expenditure. Labour argues that by making the cuts now - taking money out of the economy - he will put the recovery at risk.
Hello and welcome to our coverage of the coalition government's first Budget. George Osborne will be on his feet at 1230 BST to deliver what is widely expected to be a tough package of spending cuts and tax increases. Some good news is expected, however, for low earners. The level at which people start paying income tax should rise by £1,000 - removing almost 900,000 people from the system.