"Light at the end of the tunnel" as Chancellor Philip Hammond delivers Spring Statement

The British economy has turned a corner following a decade of growing debt caused by the financial crash and there is now 'light at the end of the tunnel', Chancellor Philip Hammond has said.

Philip Hammond

See how the Statement unfolded on our live blogMr Hammond hailed the first “sustained fall in debt for 17 years”, expected to begin next year, as he laid out economic forecasts in a pared back Spring Statement.

He confirmed that in 2018-2019 the Government's day-to-day spending will be in surplus, while the UK’s debt mountain will peak at 85.6% of GDP this year and gradually fall to 77.9% by 2022-23.

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This marks “a turning point in the nation's recovery from the financial crisis of a decade ago" and there is now "light at the end of the tunnel", he said.

There was also immediate good news for the Chancellor as economic growth forecast by the independent Office for Budget Responsibility (OBR) was revised up from 1.4% to 1.5% for 2018, before falling as expected to 1.3% during Britain's first years outside the European Union in 2019 and 2020.

But the OBR revised down its forecasts for once the expected “status quo” post-Brexit transition period ends, down by 0.1% to 1.4% in 2021 and 1.5% in 2022.

Mr Hammond suggested the news was good enough to consider loosening the spending taps in autumn’s full-scale Budget.

The Chancellor said: "If, in the autumn, the public finances continue to reflect the improvements that today's report hints at then - in accordance with our balanced approach and using the flexibility provided by the fiscal rules - I would have capacity to enable further increases in public spending and investment in the years ahead, while continuing to drive value for money to ensure that not a single penny of precious taxpayers' money is wasted."

Throughout his statement, Mr Hammond was keen to portray an optimistic vision of Britain's future to counteract Brexiteers' view of him as an "Eeyore" Chancellor who sees EU exit as a damage limitation exercise.

Attacking Labour, he said: "If there are any Eeyores, they are over there (on Labour benches). I am at my most positively Tigger-like."

As expected, there were no new tax and spending announcements, Mr Hammond explaining this would bring the UK’s economic policy in line with other major countries.

But Yorkshire cities were invited to compete across England for £840m to improve transport.

This is half the total announced for the fund in the Autumn Budget, with the remainder given to combined authorities with metro mayors.

Yorkshire has yet to elect a metro mayor, with devolution talks mired in disagreements, but elections for a Sheffield City Region mayor will take place in May.

The Commons was told that inflation will fall to two per cent by the end of year, and that real wages will start rising again by the first quarter of next year.

Among consultations to pave the way for potential policy changes in autumn, he announced a potential reduction in vehicle excise duty on the cleanest vans, a move he said was a boost for "white van" drivers.