Chancellor Alistair Darling today acknowledged that Britain was facing the deepest recession since the Second World War as he slashed his economic forecasts.

Delivering his Budget statement made this afternoon, Mr Darling warned that output would shrink by 3.5 per cent this year - more than doubling his previous forecast.

And he revealed that borrowing this year would soar to a record £175 billion - with another £173 billion in 2010 - as the country battled with the worst global downturn in 60 years.

He said the recession and the credit crunch had made it much harder for people to take their first step up the housing ladder.

To help he was extending the Stamp Duty holiday on properties sold for less than £175,000 until the end of the year.

He also said: "I will continue to monitor oil prices, but I expect that fuel duty will increase by 2p per litre in September, and then by 1p a litre above indexation each April for the next four years.

"Alcohol duties will go up by 2% from midnight tonight. There will be an increase in tobacco duty of 2 per cent from 6pm tonight. Taken together, these measures will raise over £6bn by 2012."

Mr Darling pledged to work with housebuilders to tackle restraints to give them "more certainty and help them meet housing demand more effectively".

He announced an extra £500 million of financial support to "kick-start building on housing projects, stalled because of the credit crunch, delivering thousands of new homes".

As part of this measure £100 million will go to local authorities to build new energy-efficient housing.

FACTFILE * 50% tax rate for earnings over £150,000 * Growth forecast revised down * Borrowing increased * £15bn 'efficiency savings' * Clawing back tax relief on top earners' pension * £2bn help for young unemployed * £1bn to boost housing market * Car scrapping scheme For a local reaction to this year's budget, see this week's Malvern Gazette