Gilt futures pared gains on Tuesday after officials raised plans for future borrowing more than the market had expected in a budget set-piece thanks to sharp cuts in economic growth forecasts.

Following George Osborne's autumn budget statement in parliament, the Debt Management Office said gilt issuance in the current fiscal year would rise to 178.9 billion pounds from the 167.5 billion pounds it pencilled in earlier this year, well above analysts' forecasts for a figure of 171 billion pounds.

After strong gains in morning trade, at 2:21 p.m. the March gilt future was 35 ticks up on the day at 114.22, while the equivalent Bund was down 48 ticks.

The British contract traded 48 ticks higher just before Osborne started delivering his autumn budget statement to parliament at 12:30 p.m. It drifted higher as he spoke and then pared gains on the gilt issuance announcement.

The downward revision in growth was largely expected and that spilt over to a likely increase in issuance. There's been a relatively modest (gilt) reaction, said Elisabeth Afseth, fixed-income strategist at Evolution Securities.

The coalition government said it would take much longer than hoped to wipe out its deficit, meaning tough austerity measures would extend beyond the next election due in 2015.

Osborne, in one of two major annual economic setpieces, warned the British economy risked getting dragged into recession if the euro zone debt crisis was not solved.

It doesn't really alter the big picture. Extra measures are being put in to make sure they stay with their target. The margin is a little tighter for reaching that target, but it still shows that they committed to it, Afseth said.

What we are seeing in Europe does emphasise the importance of that, although a large part of the lower rates (yields) in the UK is due to independent monetary policy as much as it is to the fiscal consolidation effort.

Gilts remained supported, not least by market expectations that the Bank of England will expand its quantitative easing programme next year, offsetting much of the increased gilt issuance.

In the cash market, the yield on 10-year gilts fell 6 basis points to 2.25 percent, around 9 basis points lower than that of the equivalent Bund, and the biggest premium for holding Bunds over gilts since early 2009 -- implying that investors see gilts as a safer bet than their euro zone counterparts.

Bank policymakers gave a gloomy assessment of Britain's economic prospects late on Monday, signalling they are prepared to expand their asset programme beyond the 75 billion cash boost they announced in October.

(Reporting by Olesya Dmitracova)