British finance minister George Osborne surprised his critics today by increasing his budget surplus target for the end of the decade, and dropping an unpopular plan to cut tax credits for low-earning households.
Mr Osborne also said he planned to spare Britain's police forces from the deep spending cuts that will hit several government departments.
This is a nod to concerns about security after the attacks in Paris earlier this month.
Turning Britain's budget deficit into surplus was central to Prime Minister David Cameron's pitch to voters in May's election and, if achieved, would help the government to cut income taxes before the next election due in 2020.
Osborne told parliament he was aiming for a surplus of £10.1 billion by the 2019/20 financial year, slightly higher than a previous target announced in July.
He said he was aiming to borrow less in the current financial year than estimated in July.
"We have committed to running a surplus," Osborne said. "Today, I can confirm that the four-year public spending plans that I set out are forecast to deliver that surplus, so we don't borrow forever and are ready for whatever storms lie ahead."
He attributed the improved outlook for Britain's finances, drawn up by an independent budget watchdog, to slightly higher economic growth forecasts in the next two years and lower debt costs than previously thought as yields on British government bonds stay low.
Osborne said that, after listening to "concerns", he was dropping a plan to make big savings by cutting tax credits for low-earning households - an idea that provoked a rare rebellion in the upper house of parliament.
The proposal was widely seen as a misstep by Osborne after Cameron pledged to make the Conservatives the political party that stood up for working people most.
"I've listened to the concerns. I hear and understand them," Osborne said, adding that the improved outlook for public finances meant he was dropping the cuts' plan altogether.
Osborne said he planned to make savings in the welfare budget from housing benefit payments for future claimants and total annual savings from welfare would remain at £12 billion by the end of the decade.
Money would be raised to pay for apprenticeships from a new levy on employers which would be set at 0.5% of an their wage bills.
In a sign that Osborne wanted to show he is sensitive to the concerns of voters, he announced more government support for home-building and the introduction of a new tax for buy-to-let property purchases by investors.
The UK also left its official growth forecast for 2015 unchanged and increased its 2016 forecast slightly today. Growth for 2015 was forecast to be 2.4% as forecast in July, and for 2016 it was increased slightly to 2.4% from 2.3% in its July forecast.
"Even with the weaker global picture, our economy this year is predicted to grow by 2.4%, growth is then revised up from the Budget forecast in the next two years," the Chancellor said.
UK government to sell another tranche of Royal Bank of Scotland shares
Meanwhile, parliament was also told today that the government plans to sell off a further £25 billion of Royal Bank of Scotland shares as it accelerates its programme to dispose of taxpayer stakes in high street banks.
It intends to sell this chunk of shares over the course of this current goverment, which ends in 2020, and plans to sell a further £5.8 billion of RBS shares in 2020-21, according to the details of George Osborne's Autumn Statement.
"The government is committed to returning the financial sector assets acquired in 2008-09 to the private sector. As there is no longer a policy need for the government to hold these assets, it will seek to dispose of them, reducing public sector net debt while maximising value for taxpayers," the statement said.
The government also reiterated its plans to sell around £2 billion worth of shares in Lloyds Banking Group to retail investors next spring, backed by a nationwide TV, print and digital campaign.
Mr Osborne added that it also expects to sell a total of £7.5 billion of Bradford & Bingley assets.
Earlier this month the Treasury sold £13 billion of Northern Rock mortgages, formally thought of as a bad risk, to US investment firm Cerberus Capital Management, in what is described as the largest ever financial asset sale by a European government.
UK government watchdog the Office for Budget Responsibility said the Chancellor has to date recovered almost £70 billion from sales of its financial sector holdings acquired during the financial crisis.
