Osborne delivered his so-called Autumn Statement, offering his latest assessment of the state of the British economy. He said the British economy is expected to grow by 2.4 percent next year, compared with the current rate of 1.8 percent.
On energy issues, the chancellor said he was proposing a new tax allowance to encourage investments in the country's emerging shale natural gas sector.
"The country that was the first to extract oil and gas from deep under the sea should not turn its back on new sources of energy like shale gas because it's all too difficult," he said in his address.
The British government in 2012 lifted a ban on hydraulic fracturing, a controversial practice known also as fracking. A ban was enacted after small tremors were reported during fracking operations.
The British Geological Survey in June estimated the Bowland shale formation in the north of the country contains 1.3 quadrillion cubic feet of natural gas. A government report said shale could ensure energy security for a country where net natural gas imports are on pace to increase from 45 percent of demand in 2011 to 76 percent by 2030.
Protesters this year staged several demonstrations to protest shale operations. The practice is seen as a threat to the environment.