Budget: Cuts and taxes 'to balance books' by 2016
The Chancellor, George Osborne, has outlined the government's plans to "balance the books" by 2016.
Mr Osborne said the government planned to cut the structural budget deficit to zero in the next six years.
The structural deficit represents the hole in the public finances that is not expected to be repaired by economic recovery.
The chancellor also said he expected the UK's total debt levels to have started falling by 2016.
But he added that the Office for Budget Responsibility (OBR) was forecasting that the government would meet these targets a year early, by 2015.
The OBR, headed by economist Sir Alan Budd, was set up to provide an independent assessment of the state of the UK's public finances and the UK economy.
Total borrowing is expected to fall to 2.1% of GDP by 2015, the OBR said, and reach 1.1% by 2016.
Current borrowing stands at £155bn - 11% of GDP.
The UK's total debt, which currently stands at more than 62% of GDP, is forecast to peak at 70% of GDP in 2013-14, before falling to 67% by 2015-16.
Announcing the plan, Mr Osborne said the Budget "deals decisively with this country's record debts".
Although confirming that the government's target for deficit reduction was achievable, the OBR warned that the economy would suffer as a result.
It is now forecasting that the UK economy will grow by 1.2% this year and 2.3% in 2011, lower than the previous government's forecasts.
Unemployment is forecast to rise to a peak rate of 8.1% this year, while inflation is also expected to peak at 2.7% by the end of the year before falling back towards the 2% target.
Mr Osborne said investors' fears over sovereign debt were now "the greatest risk" to the economy, and denied that he was choosing between cutting the deficit and securing economic recovery, calling it a "false choice".
Labour has argued that cutting the deficit too quickly could risk pushing the UK back into recession.
But worries over the high public debts in Greece and Spain have caused widespread concern in financial markets in recent weeks, with investors questioning the sustainability of Europe's public finances.
"I do not want these questions ever asked of the UK," the chancellor said.
The secretary general of the Organisation for Economic Co-operation and Development (OECD), Angel Gurria, welcomed the Budget, calling it "far-reaching" and "courageous".
"It provides the necessary degree of fiscal consolidation over the coming years to restore public finances to a sustainable path, while still supporting the recovery," he said.
Fitch Ratings, one of the three major rating agencies, also welcomed the Budget, saying it a "represented a material strengthening of the commitment to fiscal consolidation and the long-run sustainability of UK public finances".
But other economists were less impressed, warning that the forecasts for economic growth were too optimistic given the drastic cuts outlined by the chancellor.
"The boost to growth in later years from lower borrowing does not look unreasonable, but the short-term effects are staggeringly small," warned Peter Spencer, chief economic adviser to the Ernst & Young Item Club.
"In particular, the OBR appears to have assumed that consumers will react to having lower incomes by simply saving less, rather than making any significant adjustments to their spending, an assumption which looks highly questionable."