Millions of workers may have to work longer before they can retire, Chancellor George Osborne has signalled in his Budget.

Mr Osborne told MPs: "I can confirm today that there will be an automatic review of the state pension age to ensure it keeps pace with increases in longevity." That raised the prospect of ever long working lives. Mr Osborne also set a target for savings in the welfare budget of £10 billion by 2016.

However, there was some good news as he revealed that the withdrawal of British troops from Afghanistan by the end of 2014 meant military operations there would £2.4 billion lower than expected.

Mr Osborne said the Office for Budget Responsibility expects UK plc "to avoid a technical recession with positive growth in the first quarter" of this year. He said the OBR had reported that the economy has "carried a little more momentum into the new year than previously anticipated".

He added: "Indeed, the Office for Budget Responsibility is slightly revising up in their growth forecast for the UK this year to 0.8%." This is up from 0.7% last autumn. The OBR is also predicting growth of 2% next year, 2.7% in 2014 and 3% in both 2015 and 2016. Mr Osborne also gave an upbeat assessment of attempts to beat down the UK's debt mountain.

There was good news in the Budget for business as the Chancellor announced another 1% cut in the rate of corporation tax from next month to 24%. He said that by 2014, the rate would be 22% which is "dramatically lower" than competitors.

He said there would be no further changes to alcohol duty rates. But he dealt a blow to smokers saying that duty on all tobacco products would rise by 5% above inflation - slapping 37p on a packet of cigarettes from 6pm.

Child benefit will only be withdrawn from higher rate tax-payers if someone in the household has an income of more than £50,000. To avoid a "cliff-edge" effect, child benefit will be withdrawn at 1% for every extra £100 earned over £50,000.

The top rate of income tax will be reduced to 45p from April 2013.

In reply, Labour leader Ed Miliband said the Budget marks the end of the Government's slogan "we're all in it together". "Millions would be paying more while millionaires paid less," Mr Miliband said, accusing the Chancellor of "failing the fairness test" by choosing to make his priority tax cuts for the wealthiest.