The economy grew by three times as much as forecast in 2013 – 0.6% – the Office for Budget Responsibility has confirmed.
George Osborne has insisted the coalition will keep “putting Britain right” as he delivered his fifth Budget.
The Chancellor said the Government had “held its nerve” and was able to deliver a boost to pensions and savers because the economy was performing better than expected.
The Office for Budget Responsibility (OBR) now predicts the UK economy will grow by 2.7% - up from its previous estimate of 2.4%.
Upward revision of GDP figures means UK economy will be £16 billion larger than OBR forecast four months ago.
Chancellor George Osborne told MPs: “The biggest risk is clear – abandoning the economic plan that is working.”
He added: “This is a Government whose plan is delivering jobs. We now have a record number in work and for the first time in 35 years a higher employment rate than the United States of America
“That is what we mean when we say we are getting Britain working.”
OBR predicts 2014 GDP growth of 2.7%, then 2.3% in 2015, 2.6% in 2016 and 2017 and 2.5% in 2018.