Chancellor George Osborne said he was determined to see Britain through the financial crisis as he outlined plans to boost the stuttering economy in his annual Autumn Statement – with the latest gloomy forecasts suggesting the country is again teetering on the edge of recession.
He was forced to admit that GDP has been revised down to 0.9% this year and 0.7% next year.
He said debt was not coming down as quickly as hoped, "but we are set to meet our targets".
He also urged union leaders to call off tomorrow's "damaging" public sector strikes, and announced further restraint on public sector pay of 1%.
Help for small businesses suffering from the credit squeese was addressed through a string of measures including an enterprise finance guarantee scheme and a credit easing scheme introduced with ceiling of £40bn. He also promised to ease health and safety regulations and employment laws for small firms.
No government had ever attempted anything like this before, he said.
He announced 500 new infrastructure projects including the A380 Bristol by-pass.
He also announced help for science and innovation, small exporters and an extra £1bn for the Regional Growth Fund in England.
He closed his Autumn Statement by saying: "All this takes Britain in the right direction". He said he was not offering a quick fix but leadership for tough times.
Following the Chancellor's 47-minute speech, Shadow Chancellor Ed Balls went on the attack in the Commons, saying the government had cut too deep, too fast with the Chancellor taking a "reckless gamble".
"We have had all of the pain and none of the gain," said Mr Balls. "All we get are excuses, blaming everyone but himself."
