Chancellor George Osborne has scrapped a planned 3p rise in fuel duty in his Autumn Statement, but has been forced to extend economic austerity measures to 2018.
He also confirmed that he will miss his own target for reducing the national debt, yet maintained Britain was "on the right track - and turning back now would be a disaster".
He did announce capital investment in infrastructure totalling £5bn over two years, which includes £1bn for roads, upgrading A1, A30, and M25. High Speed 2 rail link will be extended to north-west England and West Yorkshire, and London's Northern Line will be extended to Battersea.
Mr Osborne had said debt would start falling as a proportion of GDP by 2015/16 - the year of the next general election.
But he has been forced to delay that target by a year due to the worse than expected state of the economy, which is now expected to shrink this year by 0.1%.
The Office for Budgetary Responsibility says the UK has a "better than 50% chance of eliminating the structural current deficit in five years time", said the chancellor - meaning his other key objective has been pushed back by a year to 2017/18.
Key features of the Autumn Statement include:
• Office for Budget Responsibility adjusts growth forecast downwards to -0.1% this year (previous forecast for 2012 was 0.8%).
• OBR forecasting 1.2% growth next year, 2% in 2014, 2.3% in 2015, 2.7% in 2016 and 2.8% in 2017. All those figures have been revised down from March's forecasts (except 2017, which is a brand-new forecast).
• The 2008-09 contraction was deeper than previously thought: GDP shrank then by 6.3%.
• OBR says government is "on course" to meet its target of getting rid of the structural deficit over five years, Osborne says.
• The deficit has fallen by a quarter in last two years and will "continue to fall". This means a £33bn saving on interest payments than that predicted two years ago.
• Period of austerity extended by one year to 2017-18.
• OBR says the government will miss its target of getting debt falling as a percentage of GDP by 2015. It will be falling by 2016-17, he says.
• Borrowing set to fall from from £108bn this year to £99bn next year, £88bn in 2014, then £73bn, then £49bn, then £31bn in 2017.
• Since the election, 1.2m jobs created in the private sector.
• OBR predicting unemployment to peak at 8.3%.
• Departmental budgets cut by 1% this year, and 2% next year. NHS and schools exempted. Local government budgets cut by 2% in 2014.
• Investment of £600m in science, £270m for further education
colleges, and £1bn for schools.
• Three pence per litre fuel duty rise planned for January cancelled.
• Additional HMRC spending of £77m to fight tax avoidance by wealthy individuals and multinationals – expected to increase money collected from tax evasion and avoidance by £2bn a year.
• New measures to save £1bn over four years from fraud, error and debt in tax credit system.
