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Plans to tax pasties have been dropped by the government.
It follows fierce opposition to the proposals, which were introduced during the budget.
The treasury says baked goods - which are intended to cool - will not be subject to VAT.
Labour says the government is a shambles for its turnaround, but the coalition says it's listened to what people want.
Campaigners are delighted with the U-turn as they claim the proposal would have taken up to £40 million out of the Cornish economy alone as well as threatening 1100 jobs in the pasty industry and its supply chain.
With this announcement, the pasty industry can go back to being the successful manufacturing sector of which Cornwall and Devon is so proud.
Protests, since the announcement in the budget, quickly grew to more than 2,500 Facebook supporters within 24 hours.
Since then there have been marches in London and Falmouth, national newspaper front pages and tens of thousands of new supporters.
North Cornwall MP Dan Rogerson said:"The Liberal Democrats in Cornwall have worked locally and nationally to persuade the government that there is another way forward.
"The fresh pasty from the bakers we have all grown up with will stay affordable and local jobs can be saved.
"Thankfully sensible voices in the Coalition have listened."