UK - GDP growth forecasts have been scaled back by Alastair Darling, to between 1.75% and 2.25% in 2008.
But he said it would still grow faster than the US, Japan and the Euro area.
He forecast growth next year would be between 2.25% and 2.75%, and in 2010 between 2.5-3%.
He said: "Right across the world, countries have lowered their forecast for growth in the coming year. Despite the slowdown in the world economy, in 2007 the British economy grew by 3% - the fastest growth of any major economy."
Darling also acknowledged inflation would rise in the short term but said it would not return to the high rates of the early 1990s.
He said rising commodity prices would be the reason for rising inflation but it would return to target in 2009 and remain on target thereafter.
In terms of pensioners, the Budget also confirmed changes to income tax and National Insurance (NI) first announced by Gordon Brown last year.
The main changes, which take effect from April 2008, will see the 10% starting rate of tax scrapped for pensions and earned income; the basic rate of income tax reduced by 2 pence to give a new rate of 20%; and the ceiling for paying the standard 11% rate of NI contributions raised by £3,900 over and above the normal inflation-linked increase.
The changes will affect members of occupational pension schemes. While tax relief is given automatically via net pay arrangements, basic rate taxpayers will still only get 20% tax relief, meaning a reduction in take home pay, or less money going into the pension.
Andrew Tully, senior pensions policy manager at Standard Life, said: "The tax and NI changes being introduced in April are more about simplifying the number of rates and bands than cutting tax bills, so some people will gain a little and some people will lose a little.
"By paying additional pension contributions before April people can get more money into their pension pot, as the government will add a greater amount of tax relief.
"People can also reduce the tax burden imposed by the increase to National Insurance by using salary sacrifice arrangements to pay their pension contributions."
In other announcements, Darling said from next month the main corporation tax rate would fall from 30% to 28%. A new Capital Gains Tax (CGT) rate will come in next month, including the entrepreneurs' relief announced in January. Darling said the change would benefit over 80,000 businesses and investors in the next year, and 90% would continue to pay CGT at 10%.
On climate change, Darling said the UK would use its £800m environment fund to work with the US, Japan and other countries, as well as the World Bank, to fund clean technologies in developing countries, and adaptation to climate change.
He said he had asked the Climate Change Committee to advise the government on whether, as part of an international agreement, it should raise target to reduce carbon emissions from at least 60% by 2050 to 80%.
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