The economy looks set to avoid a renewed recession and the recovery will pick up speed next year, Chancellor George Osborne said in his budget statement on Wednesday.

The government's forecast body OBR expected the economy to avoid a technical recession with positive growth in the first quarter of this year, Osborne said.

They say that British economy had 'carried a little more momentum into the new year than previously anticipated', he added.

The economy was set to grow by 0.8 percent this year and growth should accelerate to 2.0 percent next year, to 2.7 percent in 2014 and 3.0 percent in the following two years.

In November, the government's independent forecasting body, the Office for Budget Responsibility, had forecast growth of 0.7 percent for this year, 2.1 percent for next, picking up to 3.0 percent in 2015 and 2016.

Britain's recovery from the steep slump caused by the 2007-2009 financial crisis has been very weak, with the economy still running well below its precrisis peak and the unemployment rate is at its highest in 16 years.

But the overall mood among businesses is slowly improving after taking a severe knock from the euro zone crisis at the end of last year.

(Reporting by Sven Egenter. Editing by Jeremy Gaunt.)