Chancellor George Osborne is expected to unveil plans for an income tax cut worth around £45 a year in his Budget as he battles to offer voters some good news amid grim economic statistics.

Mr Osborne confirmed he will raise income tax thresholds in real terms in the March 23 Budget, amid reports that he may take all those earning under £8,000 out of the tax altogether.

His annual statement will also introduce help for first-time home buyers through a £250 million Treasury-backed scheme to offer equity loans worth 20% of a property.

And he has dismissed Labour's call for a Plan B of slower and gentler cuts, which he insists would be "a huge mistake" and risk shattering market confidence in the UK.

Motorists are hopeful the Chancellor will scrap - or at least postpone - the 1p hike in fuel duty scheduled by Labour predecessor Alistair Darling for April 1.

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