The Chancellor has forecast that the recovery remains on track with the economy growing at 3 to 3.5% next year as it continues to "re-balance after the recession".
The economy is expected to grow at around 1 to 1.5% this year but already inflation is rising, a sign of growth, although the Chancellor Alistair Darling said he expected this to be temporary and it will drop back to 2%.
Darling said that interest rates were also expected to "remain low and stable" providing ideal conditions to support growth.
He said that it had also cut government borrowing by billions as a result of revenue from bank bonuses and "this will mean debt is £100bn lower by 2013/14 than was expected in last year's budget".
The reduction in the deficit said Darling meant it had halved over a four year period "Should the economy do better than expected we will be able to do more to reduce the deficit".