Chancellor George Osborne has unveiled detailed plans over government cut backs that will reduce the country's record peacetime budget deficit in his comprehensive spending review.
Osborne announced that the government would be making Whitehall savings of £6bn - double its initial target of £3bn. The Chancellor said that thanks to the coalition government's quick action the UK was now out of "the danger zone" but that the country is paying £43bn a year in debt interest and has the "largest structural deficit in Europe." He stated that the structural deficit would be eliminated by 2015.
Osborne confirmed that 490,000 public sector jobs would be cut but reiterated that this would be over a four-year period. He also claimed that the private sector created 178,000 jobs in the last quarter.
The small companies tax rate will also be cut to 20% in an attempt to encourage small businesses to grow
The Conservative minister said that he wanted to make it cheaper for companies to hire new staff and thus the Employers' National Insurance threshold will rise. Corporation tax - currently at 28% - will be cut by 1% each year for the next four years, bringing it down to 24%, one of lowest rates in the G20.
The small companies tax rate will also be cut to 20% in an attempt to encourage small businesses to grow and The Enterprise Finance Guarantee scheme is to be extended.
Entrepreneurs will be interested to note that from midnight, higher-rate taxpayers will pay 28% on their capital gains. The 10% for business owners will be extended to cover the first £5m of gains, up from £2m.
Mr Osborne says he completely understands the public's anger at banks, which he claims have been "so poorly regulated". He announced a plan to impose a permanent levy on banks and said that he would ensure that they all sign up to a code of practice.
It has also been announced that the state pension age will now rise to 66 by 2020 for both men and women, a policy which will eventually save the government £5bn a year by the end of the next parliament.