UK's Osborne upgrades election year growth forecast to 2.5%

Britain's economy was set to grow by a better-than-expected 2.5 percent this year, George Osborne said Wednesday in the coalition government's final annual budget before May's general election.

The government forecast compares with 2015 gross domestic product expansion of 2.4 percent predicted in December, Chancellor of the Exchequer Osborne added in an address to parliament.

"This is a budget that takes Britain one more step on the road from austerity to prosperity," the Conservative minister said.

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.

Britain, led by Conservative Prime Minister David Cameron, is set for a knife-edge election battle in 50 days' time.

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 on seven percent.

Britain upgraded also its growth forecast for 2016, predicting that the country's economy would expand by 2.3 percent next year compared with the previous official estimate of 2.2 percent.

"Today, I report on a Britain that is growing, creating jobs and paying its way. We took difficult decisions in the teeth of opposition and it worked -- Britain is walking tall again," Osborne said.

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 OECD group of leading economies last month approved Britain's running of the economy but warned about growing inequality.