The chancellor Alistair Darling has unveiled a £20 billion fiscal injection in his second pre-Budget report, which he says will help households and businesses weather the financial storm.
You can find out all the details from the pre-Budget report 2008 here.
Below is a summary of the measures:
* From 1 December, VAT will be cut by 2.5%. The new 15% rate of VAT will continue for 13 months before returning to thepresent level of 17.5% at the beginning of 2010. By this time, thegovernment says it expects economic recovery in the UK to be underway.
* The temporary £120 increase in personal allowances for basic rate taxpayers will now be a permanent measure, and will increase to £145 a year from April 2009. Darling says this will benefit 22 million basic rate taxpayers.
* People earning more than £150,000 will be hit with a new higher rate of income tax (45%) from 2011.
* From April 2011, national insurance contributions will increase by half a percentage point for both employees earning more than £20,000 and employers as well as the self-employed. At the same time, the starting point for national insurance will increase to align it with that of income tax.
* From April 2010, a reduced personal allowance will be introduced for people earning more between £100,000 and £140,000. There will be no personal allowance for anyone earning more than this.
* The Rapid Response Service, which provides support in the work place in the form of advice on job-search, careers, and accessing existing vacancies, will be expanding to include smaller workplaces.
* A greater provision of pre-redundancy retraining will be offered through the Train To Gain initiative.
* A new initiative to help fill the half a million vacancies will be created through the country’s major employers, including Tesco and Royal Mail. The National Employment Partnership will be chaired by the Prime Minister.
* Mortgage lenders have agreed to wait for at least three months after a borrower falls into arrears before starting repossession proceedings.
* The government has promised £1.8 billion of support for the housing market, including £15 million of new funding for free debt advice available to everyone. £775 million will be used this year and in 2009 for new affordable housing.
* Increase the upper limit of the mortgage interest scheme to £200,000 from £175,000. This was already increased from £100,000 in September 2008.
* The vulnerable homeowner scheme will be extended to include those that took about secured loans on top of their mortgages.
Small and medium-sized businesses
* Small and medium firms will be given help to reduce their costs, through temporary increase in the threshold for empty property relief and will be allowed to spread their tax payments on a timetable they can afford.
* Darling promised to take whatever action needed to ensure banks support businesses.
* The government will offer credit up to £1 million to small businesses experiencing short-term cashflow problems as part of a £1 billion scheme.
* The corporation tax increase will be deferred for small businesses.
* Small companies will be allowed to offset losses from the past three years up to £50,000.
* £3 billion of public spending will be brought forward to 2010 to be invested in the motorways, schools and social housing.
* Phasing in new rates of duty rates. In 2009, duty rates for all cars will increase by a maximum of £5 as has been normal practice. From 2010, there will be differential increases in duty. In the original proposal, some cars would have seen increases of up to £90. Now, the more polluting cars will see duty increased up to maximum of £30. And less polluting cars will see no increase or a cut of up £30.
* The government previously promised to increase the child element of the Child Tax Credit by £50 above indexation next April and by £25 above indexation in 2010. Both these increases will now be introduced together in April 2009. The increase in child benefit from £18.80 to £20 a week will be brought forward to January 2009.
* Increase in pension credit in April from £124 to £130 a week for individuals, and from £189 to £198 for couples.
* State pension will increase inline from £90.70 to £95.25 from January 2009.
* One-off payment of £60 to help with fuel from January 2009.
Darling opened his pre-Budget report 2008 with the admission that these are "challenging times" and that he would take "responsible steps to support people and business now".
He said that, as a country, the UK needed to "live within its means". He added he was confident the slowdown would be "shallower and shorter" than without the measures outlined and that the UK is in a relative position of strength.
However, Darling admits the UK will be hit more directly than other countries by the global recession.
And although interest rates have already been cut by 2% since October, Darling says monetary policy will not be enough to stimulate the economy and action is needed now to boost economic activity and help the UK emerge "quicker and stronger" from these difficult times.
He said he would not let families "go to the wall" and he would do "whatever it takes" to help people through the storm.
In order to help the British economy, Darling said public borrowing would have to rise, peaking at £188 billion in 2010. But he added that if the government did nothing, it would cost the economy more in the long-run.