Chancellor George Osborne has unveiled plans to scrap an expected rise in fuel duty and boost investment in science, transport and education, despite accepting that the government will fail to deliver its pledge to get public debt falling by 2015-16.
On 5 December 2012, delivering his annual Autumn Statement to MPs on the state of the UK economy, Mr Osborne said: "It's taking time, but the British economy is healing."
He conceded: "The point at which debt starts to fall has been delayed by one year, to 2016-17."
Fiscal watchdog the OBR also now forecasted that the UK's economy would shrink by 0.1% this year, after performing "less strongly" than expected, the chancellor added.
But Mr Osborne said that a further cut to corporation tax would advertise to the world that "Britain is open for business".
On fuel duty, he said: "There is a 3p-per-litre rise planned for this January. Some have suggested we delay it until April."
To loud cheers, the chancellor added: "I disagree. I suggest we cancel it altogether."
The government will invest in "four major new road schemes", he said, and guarantee loans to extend the London Underground's Northern Line to Battersea Power Station and to the Olympic Park.
"We are today announcing £600m more for the UK's scientific research infrastructure," he added, and £1bn would be used "to expand good schools and build 100 new free schools and academies".
He also announced that "most working age benefits including Job Seekers Allowance, Employment and Support Allowance and Income Support - will be uprated by 1% for the next three years".
But shadow chancellor Ed Balls said the statement revealed the "true scale of this government's failure", claiming the UK was "falling behind in the global race" as a result of Mr Osborne's management of the economy.
The deficit had been revised up and national debt was rising, Mr Balls said.
"Our economy this year is contracting, the chancellor has confirmed government borrowing is revised up this year, next year and every year," he said.
But the Labour MP welcomed the decision to scrap the planned rise in fuel duty.