The smile that says Britain's on the mend: The day that proved George Osborne austerity plan is working Economic growth is set to more than double this year House prices are set to rise by 5.2 per cent on average next year But Labour says families are facing a cost of living crisis By James Chapman and Hugo Duncan Britain's burgeoning economic recovery will see house prices roar back to life, adding more than a quarter to the value of the average home in the next five years, according to official forecasts yesterday. A confident Chancellor George Osborne declared Britain back on track thanks to the Government's economic plan, with growth set to more than double this year in the biggest upgrade for 14 years. Labour insisted that many families were still being squeezed, with increases in the cost of living set to outstrip wages until 2014 or 2015. Other critics warned of the dangers of a recovery built on a housing price boom and increased household debt. Smile when you're winning: Chancellor of the Exchequer George Osborne in the Commons yesterday But there was little doubt that yesterday was a triumphant moment for Mr Osborne, whose Autumn Statement left a red-faced Shadow Chancellor Ed Balls floundering and facing damaging sniping from his own side. House prices are expected to rise by a "stronger than expected" 5.2 per cent on average next year, another 7.2 per cent in 2015, and will be 10 per cent higher by 2018 than previously predicted - delighting homeowners, but raising concerns about another housing bubble and the potential for interest rate rises as soon as 2015. The boom will add about £45,000 to the value of a typical home between now and 2018, but Mr Osborne pointed out prices would still be 3 per cent lower in real terms than they were before the credit crunch started in 2007. Yesterday, economic growth forecasts were more than doubled by the independent Office for Budget Responsibility (OBR) to 1.4 per cent for this year and 2.4 per cent in 2014. "Britain's economic plan is working," Mr Osborne told the Commons, saying the UK was expanding faster than any other advanced economy. It's a serious plan for a grown-up country. But the job is not done. By doing the right thing we are heading in the right direction. Britain is moving again: let's keep going. Hailing the "sacrifice and endeavour" of the British people, he said Labour had been proved "comprehensively wrong" for insisting there would be no return to growth until public spending taps were turned back on. In a deeply political statement, Mr Osborne said he would tighten the rules for tackling the budget deficit. Britain should run a "small cash surplus" by 2018, he told MPs, revealing that a new "charter for budgetary responsibility" would be put to a Commons vote just months before the next general election. It would mean that once the public finances return to the red, the cash will have to be used to help pay down debt. In only 11 of the 65 years since 1948 has the UK government recorded a surplus, now forecast for 2018. Mr Osborne insisted the Government's welfare squeeze must continue, also challenging Labour to sign up to a new, permanent cap on most benefit spending before 2015. The Chancellor's plans were calculated to box Labour in, leaving the opposition open to charges of fiscal irresponsibility if it refuses to back the Government's proposals. The OBR said that by 2018, when it expects the budget to be in surplus, the Government's "consumption of goods and services" - essentially day-to-day spending on public services and bureaucracy - will have fallen to its smallest share of national income since 1948. Other key measures and forecasts in yesterday's statement included: *A boost for business, with employers" National Insurance scrapped for workers under 21 and business rates capped. * Unemployment to fall from 7.6 per cent this year to 7 per cent in 2015 and 5.6 per cent by 2018. * A permanent new welfare cap, to take effect from 2015, and a requirement for jobless youngsters to undertake training or work experience. * Next year's planned 2p increase in petrol tax scrapped, and rail ticket rises capped at inflation. * Average household energy bills to fall by £50 as green levies are scaled back. * Future state pension age increases accelerated to save a further £400billion over the next 50 years. * Free school meals for children in reception, year one and two. * A new £200 tax break for married couples, which will be uprated in line with the personal tax allowance. Labour insisted that the rosy economic figures did not alter the fact that many people were experiencing a "cost of living crisis." Chancellor George Osborne's dog Lola, a Bichon Frise, entering Number 10 It looks like the new top dog at Downing Street is already taking her duties very seriously... Lola, George Osborne's bichon frise, made her first public appearance yesterday - perhaps to give the Chancellor some moral support. The puppy, introduced on Twitter at the weekend, was carried into No.10 by an aide. The OBR said earnings would not start to outstrip inflation until either next year or 2015, depending on which measure of inflation is used. It also suggested the recovery is still unbalanced, and there was a potential for growth to slow before the next election. Mr Balls, who struggled to make himself heard above Tory jeers, said: "For all his complacent boasts, for three damaging and wasted years, for most people there is no recovery at all." He insisted that despite the Chancellor's "smoke and mirrors," the Government was borrowing £198billion more than it planned in 2010. Liberal Democrat Business Secretary Vince Cable said there was "clearly still a danger of house prices getting out of control," and cast doubts on parts of the Chancellor's flagship Help to Buy scheme, which helps people with small deposits get mortgages on houses worth up to £600,000. It's very difficult for people on middle incomes to get into the housing market without the bank of mum and dad. And the danger is if you fuel demand, then prices are driven up even more," he said. Mr Balls insisted that despite the Chancellor¿s ¿smoke and mirrors¿, the Government was borrowing £198billion more than it planned in 2010 The key is to build more houses. We are beginning to see a big upsurge in construction . . . but we need an awful lot more. The dramatic recovery in the housing market also looks set to swell Treasury coffers, with stamp duty receipts set to almost double from £8.9billion this year to £16.8billion in 2018-19. The forecasts are likely to cause unease at the Bank of England where officials are worried about prices spiralling out of control. Governor Mark Carney last week warned the housing market could pose a "risk to financial stability." Jan Crosby, of KPMG, said: "The increase in house prices is much larger than expected. It fuels fears of another boom and bust. The forecasts are startling and demonstrate the crucial need to create a sustainable housing market.