(Reuters) - Chancellor George Osborne will try to make voters feel that the economy's recovery is finally working for them when he delivers an annual budget on Wednesday, seven weeks before a national election that remains too close to call.
Five years into his austerity plan to fix Britain's public finances, Osborne has said he will not indulge in pre-election gimmicks and will instead stick to tough spending cuts if his boss, Prime Minister David Cameron is re-elected on May 7.
But with his Conservatives and the opposition Labour Party deadlocked in opinion polls, Osborne is under pressure to ease the squeeze on households whose earnings remain below their level at the 2010 election, when adjusted for inflation.
Osborne is expected to raise further the threshold at which earners start to pay income tax when he delivers his budget statement in parliament, starting at around 1230 GMT.
He is likely to announce other voter-friendly measures, such as lower tax on beer, in an attempt to blunt Labour's accusations that he has presided over a cost-of-living crisis in Britain.
Economists say Osborne could afford to go further and cut income taxes, thanks to an unexpected 5 billion-pound windfall from lower interest payments on inflation-linked bonds and welfare costs caused by the recent plunge in inflation.
But Osborne has staked his credibility on bringing down Britain's budget deficit which remains among the biggest in the world at 5 percent of gross domestic product and a big giveaway now would be immediately be branded by Labour as a U-turn.
Instead, he may use some of the inflation savings to scale back the tough austerity targets he plans for the next five years, if he remains in the finance ministry from May.
Labour seized on a half-yearly budget update by Osborne in December which showed spending falling to its lowest level as a share of GDP since the 1930s by the end of the decade.
In an interview with BBC television on Sunday, Osborne did not confirm that he would stick to the target of a 23 billion-pound surplus by the 2019/20 financial year.
In a move which could please older voters, Osborne has already said pensioners will be given the freedom to cash in their annuities, extending pension reforms announced last year.
He is expected to give more details of a crackdown on multinationals deemed to have artificially shifted profits abroad to pay less corporation tax.
British media have said there may be tougher penalties for tax advisers who help wealthy individuals avoid paying tax, something that could help Osborne tackle a perception among voters that he and Cameron side too much with the wealthy.
Osborne is also expected to announce tax breaks for the North Sea oil and gas industry, which is struggling to cope with the plunge in global oil prices.