Britain's Conservative government announced a budget today combining small income tax cuts and social benefit increases with similarly modest tax breaks for industry, a program intended to appeal to voters in what many in Britain expect to be an election year.

Chancellor of the Exchequer Sir Geoffrey Howe said his was a "budget for Britain's continuing recovery." As a blueprint for the economy, it was regarded by commentators across the political spectrum as, at most, a distinctly cautious stimulus to the economy amid signs that the country is finally emerging from its most severe recession in half a century.

The tax cuts are worth about $2.2 billion, slightly less than had been forecast before the drop in North Sea oil prices introduced an element of uncertainty in the government's revenue estimates.

Most oil industry experts here expect another cut in the North Sea price soon. Howe's figures seem already to have taken this into account. "It is unnecessary as well as impractical," he told the House of Commons, "to react to every deviation in the oil market" in planning the nation's economy.

On the whole, today was a good one for British industry. The major banks cut their base lending rates by half a percent to 10.5; the stock market, according to the Financial Times index of leading shares, hit a record 672.3, and manufacturing output jumped 2.5 percent in January.

And in the budget, Howe announced a cut of half a percent in the employers' payroll tax for National Health Insurance, bringing it down to 1 percent. This was an unexpected move to ease a levy, imposed by the last Labor government, that is particularly unpopular with British business.

In addition, there were lesser concessions and incentives to business, primarily to encourage smaller firms. Nonetheless, Sir Patrick Meany, a member of the council of the Confederation of British Industry, said today's budget "doesn't do a great deal to nurture and sustain economic recovery."

This view was based on the budget's decided emphasis on tax benefits for individuals rather than business. These, Meany said, have little effect on the country's continuing high levels of unemployment, now nearly 14 percent.

But David Basnett of the Trade Union Council denounced the benefits as nowhere near large enough. He said the budget was "sad, mean, pessimistic and doesn't do anything significant about the economy."

The benefits raise the threshold for paying income tax at the lower end of scale, which Howe said would mean 1.25 million fewer taxpayers. He also announced an 11 percent increase in child-benefit payments, which go to all families regardless of income, bringing them to $9.75 a week per child.

Pensions, unemployment and disability payments are generally going to keep pace with inflation or fall slightly below, according to Howe's announced new figures. Britain's present inflation has fallen to a 5.4 percent annual rate. But Howe forecast the rate would go to 6 percent by the end of year, largely because of the recent fall in the value of the pound compared to the dollar. He said, however, that the government's generally prudent monetary policies assured that the rise would be merely "temporary."

Howe said the deficit would be about $12 billion in the fiscal year beginning next month, which would be relatively smaller than that of the Reagan administration. He placed overall budget expenditures at about $182 billion.

Today's budget gives little indication of exactly when Prime Minister Margaret Thatcher is likely to call an election. She is not required to do so until May 1984, but it is generally assumed that she will do so sooner to take advantage of her current standing, as measured by public opinion polls, and an expected upturn in the economy.

But the budget is by no means designed to give extra buoyancy to the economy as a means of attracting votes. Howe specifically ruled out "reflation" as a government strategy. "We shall not change course," he said. "Downward pressure on inflation shall be maintained."

Howe promised to develop "free ports," where imports would be duty free. The chancellor did not say where such free ports would be established nor whether they would be intended as a draw for tourists or for industrial investment.