In pre-election budget, UK economic growth upgraded

LONDON (AP) - U.K. Finance Minister George Osborne was bullish about the British economic outlook as he presented his final budget statement ahead of what is expected to be the tightest general election in decades.

Citing independent forecasts prepared for the budget, Osborne said Wednesday that the U.K. economy is set to grow faster than anticipated this year despite downgrades to global growth and trade.

He said the Office for Budget Responsibility thinks the U.K. will grow by 2.5 percent this year, up slightly from its last prediction of 2.4 percent.

Osborne also said that the U.K.'s public finances are on the mend and that the budget will be in surplus by 2018-19. Britain, he insisted, is "walking tall again.

The Labour Party, Britain's main opposition, claims the government's deficit-reduction program over the past few years, which has led to big cuts in spending in some departments, has disproportionately hit the poor and working class people and is damaging the long-term health of the country.

Osborne's statement to a packed House of Commons comes ahead of the May 7 general election, which opinion polls say is too close to call, with Osborne's Conservative Party neck-and-neck with the Labour Party. As things stand, no party is anticipated to achieve a majority in the election. That will mean deals will likely have to be struck after the election for a government to be formed.

With that tight election looming, Osborne is expected to unveil a series of measures designed to boost support for the Conservative Party ahead of the election, using savings generated by low inflation rates and proceeds generated from asset sales, such as shares in bailed-out Lloyds Bank.

Record-low interest rates and near zero inflation are expected to reduce the government's borrowing costs, providing room for pre-election largesse, economists suggest.