George Osborne is delivering the Budget for 2011 at the House of Commons.
Outlining his so-called 'plan for growth', he has blamed high inflation on the price of oil, which has risen by 30 percent in the past five months and surprised the House of Commons with a raft of measures aimed at easing the price of petrol.
He has announced an immediate cut in fuel duty and the planned increase in fuel duty next week will be delayed until 2012. This would have increased a litre of petrol by around 5p.
Another planned increased in April 2012 will be put off until the summer of 2012 and the Chancellor has also announced that he will abolish the fuel duty escalator introduced by the former Labour government which sees fuel prices rising each year by inflation plus 1p.
This will be replaced by what the Chancellor calls the 'fair fuel stabiliser', which will increase taxation on oil companies. This could mean that the scrapping of the fuel duty escalator is negated by a rise in the wholesale price of fuel.
The Society for Motor Manufacturers and Traders has welcomed the Budget and says that it will encourage the growth of the automotive industry in the UK. SMMT chief executive Paul Everitt says: "The Budget recognised the strength of the UK manufacturing sector and its ability to steer our economy out of recession. We are pleased to see that the Chancellor's plans have a strong focus on manufacturing and making the UK an attractive place to invest."
Automotive insurer Warranty Direct has already welcomed to the injection of cash but has called for a wider strategy that will deal with the state of UK roads over the next 10 years.
Managing director, Duncan McClure Fisher, says: "Motorists will appreciate this extra support as it will mean less cars get damaged. It's not a solution to the problem – piecemeal cash injections won't do the trick – but at least it's a step in the right direction."
The Chancellor has also reaffirmed the government's commitments to promoting low emission cars by providing tax breaks in Road Fund Licence and company tax schemes.
This could mean more pain for drivers of larger-engined cars as the Treasury seeks to claw back money given away elsewhere.
Vehicle Excise Duty will increase only at the rate of inflation and mileage allowances have been increased by the government from 40p to 45p per mile.
More news as it emerges - follow the Wallet Pop liveblog for instant coverage on the Budget as a whole.