UK's Osborne set to unveil pre-election budget

Britain's coalition government unveils a highly political budget Wednesday that will set the stage for a knife-edge election battle in 50 days' time.

Finance minister George Osborne from Prime Minister David Cameron's Conservative party will deliver his 2015/2016 tax and spending plans at 1230 GMT.

The centre-right Conservatives, currently in a coalition with the centrist Liberal Democrats, hope the budget will deliver a boost ahead of the May 7 election, capitalising on the nation's solid economic recovery and tumbling unemployment.

The Conservatives are running at 33 percent support compared to 32 percent for the main opposition Labour party, according to a rolling average of opinion polls compiled by the UK Polling Report website, while the Lib Dems are trailing on just seven percent.

Chancellor of the Exchequer Osborne has vowed there will be "no giveaways or gimmicks" as he sticks to his long-term deficit-slashing plan to lift investor confidence and economic growth.

However, media reports suggest that the nation's coffers will be boosted by about £6.0 billion ($8.8 billion, 8.3 billion euros) thanks to the brighter economic outlook and sliding inflation.

- Modest sweeteners -

With less than two months to go until the general election, that could give Osborne room for modest sweeteners, while he is expected to hike official growth forecasts and lower his state borrowing projections.

Reports also suggest that the salary threshold at which workers start to pay income tax will be lifted by £400 to £11,000.

On the eve of the budget, the government announced plans to lift the minimum wage by 20 pence to £6.70 per hour from October.

Under Cameron's government, in power since 2010, there has been a strong economic recovery despite painful austerity cutbacks which centre-left Labour leader Ed Miliband says have damaged the economy and hurt the poor.

The economy surged last year by 2.6 percent, the fastest annual pace since before the 2008 financial crisis. That missed the government's forecast for expansion of 3.0 percent after a fourth-quarter slowdown.

Separately, the government was buoyed Wednesday by official data showing that Britain's unemployment total has tumbled to a near seven-year low, while a record number of people are in work.

Most economists agree that more austerity is on the horizon whatever the outcome of the vote.

The coalition had previously vowed to eliminate the public deficit by the time of an election in 2015.

But Osborne had admitted in December that he would miss the key deficit-cutting target.

- 'Google tax' -

Nevertheless, he is expected on Wednesday to lower his borrowing forecasts as a result of bumper taxation revenues and data revisions.

The budget was meanwhile set to contain perks for older voters and a so-called "Google tax" on companies that shift profits overseas.

Osborne will also flesh out plans to boost investment in transport infrastructure, particularly in northern England.

And he could reveal tax breaks for the offshore energy sector -- a precious source of revenues -- which has called for urgent action to boost North Sea exploration in the face of slumping oil prices.

"Pre-election budgets are always a little different as they offer the opportunity to stand up and give the country an hour long outline of your manifesto," noted analyst James Hughes at online broker Etoro.

He added: "George Osborne likes to pull a rabbit out of the hat quite often in his budgets, and with an election looming anything that helps the electorate have more money in their pocket is a sure fire way to win votes."

Osborne had predicted in December that the economy would grow by 2.4 percent in 2015, 2.2 percent in 2016 and 2.4 percent in 2017.