The lower-than-expected growth figures are due to weak Q4 figures last year, a rise in world commodity prices and higher-than-expected inflation, the Chancellor said.
The independent Office for Budget Responsibility (OBR) had earlier forecast 2.1% growth this year and 2.6% in 2012.
Opening his Budget speech, Osborne said the OBR now expects growth of 2.5% in 2012, 2.9% in 2013, 2.9% in 2014 and 2.8% in 2015.
He added inflation will likley remain between 4% and 5% this year, 2.5% in 2013 and 2% in 2014.
Elsewhere, he said borrowing will be £146bn this year, £122bn next year, and £111bn the year after that, falling to £29bn by 2015/16.
Osborne said today’s Budget would not be not a tax-raising Budget, but nor would it be a “give-away”.
More to follow…