GEORGE Osborne was forced today to acknowledge a grim picture of declining growth and rising unemployment for the UK in the years to come.

The Chancellor insisted he will still meet his key target of eliminating the UKs structural deficit by 2015/16.

But his Labour shadow Ed Balls said the economy was flatlining and had suffered all of the pain and none of the gain at the Government's hands.

The Office of Budget Responsibility forecasts announced in today's Autumn Statement predict growth at 0.9 per cent for this year and 0.7 per cent for 2012 - sharply downgraded from 1.7 per cent and 2.5 per cent in the OBR's last forecasts at the time of the March Budget.

Growth is then expected to pick up to 2.1 per cent in 2013, 2.7 per cent in 2014, and three per cent in 2015 and 2016.

The OBR also said unemployment will increase from 8.1 per cent this year to 8.7 per cent in 2012 before falling back to 6.2 per cent by 2016.

Mr Osborne announced a package of growth measures intended to boost GDP by encouraging investment in infrastructure, small companies and the regions and getting young people into work.

But he had few high-profile goodies for ordinary voters, simply confirming widely trailed reports that he would hold rail fare increases down to inflation plus 1% and cancel a planned 3p rise in fuel duty, as well as providing free nursery care for 260,000 two-year-olds.

Pensioners will see a £5.30-a-week boost to £107.45 in their basic state pension and work-related benefits will be uprated in line with the unusually-high CPI inflation rate of 5.2 per cent recorded in September.

But some of the money will be clawed back by holding down increases in elements of the tax credit system.

Public sector workers were told that annual pay rises will be limited to one per cent for two years after their current pay freeze ends.

And Mr Osborne announced that the pension age will be raised to 67 from 2026.

The Chancellor told MPs that his statement offered leadership for tough times, rather than promises of quick fixes and more spending that this country cant afford at times like this.

But Mr Balls said that the OBR figures showed the economy flatlining to the extent that borrowing would be higher at the end of the Parliament than it would have been under Labours plans.

Mr Osborne's austerity agenda "had been entirely counter-productive and self-defeating", said the shadow chancellor, adding: "It's back-fired. We have had all of the pain and none of the gain."