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The government was accused of betting on sparkling growth in the second half of the parliament to keep Britain on course to pay its debts.

Critics warned George Osborne, the chancellor, that he risked missing his target to eliminate the annual deficit in five years if optimistic growth figures failed to materialise. Business groups and City economists said there was a strong possibility that growth this year would also prove to be more disappointing than expected by the Treasury.

Douglas McWilliams, of the independent thinktank the CEBR, said he expected the economy to remain sluggish this year in the face of public spending cuts.

David Kern, chief economist at the British Chambers of Commerce (BCC), said the turbulence in world markets following the tsunami in Japan and unrest throughout the Middle East and north Africa could also dent the UK's growth.

They disagreed with predictions by the Office for Budget Responsibility, the government's new independent fiscal watchdog, that growth would be 1.7% in 2011 and move up quickly in subsequent years.

Kern said: "While the growth forecast is more realistic than the previous prediction in November, we believe it is still too ambitious. The new forecast assumes a strong recovery in the early quarters of 2011, and may not have fully taken into account the effect of recent global events on the UK."

He said rises in interest rates could also restrict growth over the next year.

In a 168-page analysis of the economy, the OBR said Britain is on course to reduce its annual budget deficit from 11% to 1.5% of national income over the next five years following a strong recovery that will see growth rise to 2.5% in 2012 and 2.9% in 2013 and 2014 before falling slightly to 2.8% in 2015. Unemployment will peak at 8.3%, or 2.6m, before falling below 2 million in 2015.

Higher growth in the last three years of the parliament will offset the effects of the chancellor's imminent public spending cuts and cuts in living standards, it said.

The chancellor had planned to cut the annual deficit to 1% by 2015, but higher than expected inflation will push up the cost of index-linked benefits and state pension payments, adding an extra £10bn a year to the cost of borrowing, the OBR said.

Economists said the budget was broadly neutral and maintained a spending reduction equivalent to 6% of GDP over the parliament. But the extra £10bn in borrowing had pushed up the deficit by more than predicted in the 2010 budget, and the level of public debt by about 1.8% of GDP higher than predicted a year ago.

Capital Economics argued that the extra borrowing was significant when the chancellor was relying on strong growth in later years to bring it back down to the original target. "The key point is that the government's fiscal plans continue to rest on a very healthy acceleration in GDP growth over the next few years, to 2.9% in 2013. That, in turn, would seem to rely heavily on the Bank of England's monetary policy committee to keep monetary policy very supportive," it said.

The MPC is deeply divided over how to respond to rising interest rates. Three members of the nine-person committee have voted for interest rate rises in the last couple of months, while Mervyn King, the Bank governor, believes rates should stay low for longer.

The MPC policy of keeping the base rate at 0.5% has been called the chancellor's "plan B" because without low rates, economic growth could slow even further, reducing consumer spending and government tax receipts.

The chancellor argued the OBR was presenting cautious figures that showed the recovery was firmly in place.

He said: "Thanks to the course we have set, the independent forecast was for our economy to grow in each of the next five years, for unemployment to peak this year and then fall and for employment to rise through this parliament.

He argued that early cuts gave greater scope for growth in future years. He also pointed out: "The UK is forecast to grow more strongly in the coming year than Spain, Italy, France, the average for the eurozone and the average for the EU."

The key changes since the OBR's November forecast have been an unexpected fall in GDP in the final quarter of 2010, a rise in world oil prices and higher than expected inflation, which has risen to more than double its target of 2% at 4.4%. It said higher than expected exports and investment by the private sector would maintain the recovery, but at a slower pace.

"Looking over the whole five year forecast horizon, we expect this recovery to be weaker than the recoveries of the 1980s and 1990s, with the calendar growth rate remaining below 3% in every year. This reflects the effects of fiscal consolidation, the relatively slow easing of tight credit conditions and ongoing private sector de-leveraging," it said.

Capital Economics said one of the biggest savings made by the chancellor was in the area of public sector investment. The cancellation of school-building programmes and other capital projects meant public sector net investment over the first 11 months of the current financial year was 20% down on 2009 at £32.7bn. "The OBR's latest forecast was that net investment in 2010-11 would be £42.3bn, which is 7% below last year's level," it said.

Growth measures outlined in the budget were excluded from the OBR's forecasts because it was too early to tell if they would have a material impact on the overall economy.

England is the largest and most populous country in the British Isles.

England covers an area of some 130,395 square kilometres. It has a population of 49,138,831 people (as of the 2001 UK Census).

The official language is (of course) English. The currency is the pound sterling (£).

England is governed as part of the United Kingdom of Great Britain and Northern Ireland (UK), which is a member of the European Union.

The UK is a constitutional monarchy. This means it has a royal family and the reigning monarch (currently Queen Elizabeth II) is the official head of state. In practice the monarch is a figurehead and the country is governed by a democratically elected government led by the Prime Minister (currently Tony Blair).

The government is elected by a general election which must be held at least every five years. Elections can be held more frequently at the will of the Prime Minister.

The UK is divided into 646 constituencies. A number of candidates stand for election in each constituency and voters within the constituency vote for their preferred candidate. The candidate getting most votes becomes the Member of Parliament (MP) for that constituency.

Most MPs belong to one of the major political parties (Labour, Conservative and Liberal Democrat). The party with the most MPs forms the government and its leader becomes Prime Minister.

If a party has more than half of the MPs (ie 324 or more) it has a majority. Provided all its MPs support its policies it is able to get all its policies made law. If no party has 324 MPs there is said to be a hung parliament, in this case the government will need the support of other parties to get its policies made law.

The Prime Minister chooses a number of Ministers (usually MPs from the governing party) to take responsibility for key areas of government. Eg the Chancellor of the Exchequer is responsible for financial policy, the foreign secretary for foreign policy, the home secretary for immiogration and law & order etc.

The UK parliament consists of two Houses, the Commons and the Lords. The 659 MPs sit in the House of Commons, this is where proposed laws are debated and voted on.

The House of Lords is the second chamber of Parliament and must approve Bills (proposed laws) before they become Acts (law). The House of Lords is not democratically elected and currently consists of 706 members (or peers). 92 or these peers sit by virtue of hereditary peerage, ie they inherited their place in the Lords. The remainder are senior bishops, senior judges or are appointed by the Prime Minister (officially by the monarch on the Prime Minister's advice).

Since 1999 Scotland and Wales have had their own devolved assemblies (parliaments). Strangely there is no English parliament, Scottish, Welsh and Northern Irish MPs all participate in the making of English law.