Chancellor Alistair Darling has said he wants to encourage research and development in the pharmaceutical and biotechnology industries, announcing a new lower 10 pence corporation tax on income which stems from patents in the UK.

The government is also working with the Wellcome Trust, Cancer Research UK and University College London to establish “the largest institute in Europe for research into long term medical challenges”, the chancellor said.

In his speech, chancellor Alistair Darling said his pre-Budget report would deliver the vision of “building a fairer society and securing opportunity for all”.

He said he was “confident that the UK economy will start growing by the turn of the year”. He is sticking to his previous Budget forecast of economic growth of 3.5 per cent in the UK in 2011-12.

But he said: “We can’t be complacent. We must continue to support the economy until recovery is established.”

He forecast public sector net borrowing as a share of GDP will fall every year and be more than halved by 2013-14.

This year, public sector investment reached a 30-year high, he said.