British Chancellor Rishi Sunak has announced a cut to fuel duty of 5p per litre, lasting until March next year.
Asda was the first major retailer to confirm it will cut prices, with a 6p per litre reduction in petrol and diesel.
The threshold for paying National Insurance will also increase by £3,000 from July. There will be no national Insurance to be paid on earnings below £12,570, saving workers £330.
The move comes as the Office for Budget Responsibility downgraded the growth forecast for this year to 3.8%.
Mr Sunak also said he will scrap VAT on energy efficiency measures such as solar panels, heat pumps and insulation installed for five years.
RS: NI Protocol means the UK Govt won’t be able to implement a planned VAT cut from 5% to zero on solar panels, heat pumps & insulation. But Stormont will receive a Barnet share in the interim. Said UKG intends raising issue with the European Commission. #SpringStatement2022
— Ryan McAleer (@RyanMcAleerbiz) March 23, 2022
And he is doubling the Household Support Fund to £1 billion.
Mr Sunak has said the nation must prepare for “the economy and public finances to worsen, potentially significantly” because of the impacts of Russia’s invasion of Ukraine.
The Chancellor is publishing a new “tax plan”, which will “help families with the cost of living”, “create the conditions for higher growth”, and “share the proceeds of growth fairly”.
Mr Sunak has said he will cut the basic rate of income tax from 20 pence in the pound to 19 before the end of the current Parliament, in 2024.
Employment Allowance will increase to £5,000 from April, which he described as a “new tax cut” worth up to £1,000 for half a million small businesses.
Mr Sunak told MPs: "Today I can announce that for only the second time in 20 years, fuel duty will be cut.
"Not by one, not even by two, but by 5p per litre. The biggest cut to all fuel duty rates - ever.
"While some have called for the cut to last until August, I have decided it will be in place until March next year - a full 12 months.
"Together with the freeze, it's a tax cut this year for hard-working families and businesses worth over £5 billion, and it will take effect from 6pm tonight."
Fuel duty has been frozen at 57.95p per litre for petrol and diesel since March 2011.
RAC head of policy Nicholas Lyes described the cut in fuel duty as "a drop in the ocean" as it will "only take prices back to where they were just over a week ago".
He said: "There's also a very real risk retailers could just absorb some or all of the duty cut themselves by not lowering their prices.
"If this proves to be the case it will be dire for drivers."
AA president Edmund King welcomed the cut but expressed concern that "the benefit will be lost unless retailers pass it on".
He also called for prices to be lowered due to the "substantial reduction in wholesale road fuel costs" since March 9.
"The road fuel trade shouldn't leave the Treasury to do the heavy lifting when cutting motoring costs," he added.
Paul Tuohy, chief executive at pressure group Campaign for Better Transport, said the cut will "do little to help those on the lowest incomes, who may not even own a car".
He went on: "Rail fares have risen at a higher rate than fuel costs, and bus fares have risen twice as fast, yet public transport passengers have not been given any help with the cost-of-living crisis."
