Cheapest and best gains would prob be go for a 1.8 Gti 8v engine swap. I'm not sure how much work is needed, but you can get a second hand engine and box for under £500, I paid £120 for my head and block with no service history, a bit of a gamble but guy seemed decent enough and its still fine almost a year and 10k miles later. You could always just start with a GTI cam, that'll give you a bit more horsepower. Also, iv heard that using a 16v exhaust cam will give bigger increase, only heard it once, see if anyone else can confirm that