Alan Bond, the founder of Reaction Engines, based in Culham, Oxfordshire, is to receive £60m from the government to build a 3,500mph 'Skylon' aircraft, whose hybrid jet-rocket engine is capable of blasting into low earth orbit.

Osborne's decision to invest in the 'Sabre' engine follows 100 successful test runs and a study by the European Space Agency to validate the design.