The Scotsman also promised an extra 600 million pounds (888 million euros, 1.18 billion dollars) for Britain's military to help fund operations in Iraq and Afghanistan, while an additional 84 million pounds was being offered for intelligence and counter terrorism purposes.

On education, Brown said he would increase spending in schools by 36.0 billion pounds up to 2011 and outlined initiatives aimed at encouraging workers to improve their skills, as he seeks better competitiveness with emerging powers China and India.

"This was a pre-budget report of a chancellor with his eyes firmly on taking over the top job in 2007, but with limited overall room for manoeuvre given the fragile state of the public finances," Global Insight analyst Howard Archer said.

In a speech lasting about 40 minutes, Brown said Britain's economy was set to grow by 2.75 percent this year compared with his previous estimate of 2.0-2.5 percent made in March. Analysts had forecast that Brown would hike his forecast to only 2.6 percent.

Chancellor of the Exchequer Brown added that gross domestic product would grow by 2.75-3.25 percent during 2007, unchanged from his previous estimate.

"I can report not only the longest period of sustained growth in our history, but of all the major economies -- America, France, Germany, Japan -- Britain has enjoyed the longest post-war period of continuous growth," he told lawmakers.

He added that the rate of British inflation would hit 2.0 percent by mid-2007 -- matching the Labour government's target -- and remain at this level during 2008. British 12-month inflation was 2.4 percent in October.

"Economies like ours must out-perform and out-innovate," Brown said, as he looked to tackle climate change in part with a target of making every new British home a 'zero-carbon' dwelling within a decade.

"We will be the first country ever to make this commitment," he added. Buyers of such homes would meanwhile be exempt from paying a tax currently levied on most properties bought in Britain.

Brown said he wanted to make London the world's leading centre for carbon trading -- a system that encourages countries to reduce their emissions of carbon dioxide, which is widely blamed for causing global warming.

Blair and Brown see tackling global warming as a priority after a report in October warned it could cost the world more than World Wars I and II and the Great Depression of the 1930s combined.

Former World Bank chief economist Nicholas Stern's 700-page report, commissioned by Brown, put the cost of doing nothing at 3.68 trillion pounds.

From February 1, Brown said his government would double air passenger duty to ten pounds per economy seat on short-haul flights and to 40 pounds on long-haul routes.

Passengers travelling business and first class will see the tax double to either 40 or 80 pounds.

Airlines, including British Airways and easyJet hit out at the measure, saying it penalised passengers without benefiting the environment.

Brown, who has steered Britain along a path of sustained growth, high employment and lower interest rates over much of the past decade, is the country's longest-serving finance chief, without interruption.

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