Meanwhile, the budget deficit in the current fiscal year, which ends March 31, will be 126 billion pounds ($199 billion), 1 billion pounds less than expected. As a percentage of GDP, debt will peak at 76.3 percent in 2014-15, lower than previously thought.
Analysts said the statement was a bit brighter than those of recent years, but that there's a long way to go before Britain has recovered from the shock of the last few years.
"The vast majority of the cuts in public spending lie ahead," said Ian Stewart, chief economist at accounting and consultancy firm Deloitte.
Osborne outlined a range of measures he hoped would kick-start growth. A cut in the corporation tax rate by a further percentage point in April takes the rate down to 24 percent. By 2014, he said the rate would be 22 percent.
The coalition government also announced plans for taxpayers to get an online record of where their tax payments go. The move follows a 2011 initiative in the U.S. where taxpayers can enter their income tax amounts in to a government website and are given a "receipt" showing how the money was spent by government.
Osborne also announced that tax relief now given to film productions would be extended next year to producers of video games, animation and "high-end" television programs such as "Downton Abbey."
"Not only will this help stop premium British TV programs like 'Birdsong' being made abroad, it will also attract top international investors like Disney and HBO to make more of their premium shows in the U.K.," Osborne said.