Philip Hammond told to perform "urgent" spending review

Philip Hammond told to perform

Philip Hammond told to perform "urgent" spending review

However, Britain's independent budget forecasters said nearly half of Hammond's fiscal headroom might be lost, depending on how official statisticians treat student loans in the public accounts.

"I am acutely conscious that the House (of Commons) has other pressing matters on its mind today", Chancellor of the Exchequer Hammond told MPs after announcing that British gross domestic product growth would be much lower than expected this year, with the United Kingdom economy hit also by China's slowdown and trade war tensions.

Delivering his spring statement after MPs emphatically rejected Theresa May's Brexit deal for a second time on Tuesday night, the chancellor said the issue was "damaging our standing and reputation in the world".

Philip Hammond could have ended austerity earlier than planned if Britain had voted to remain in the European Union, while crashing out without a deal would erase his spending power for boosting public services, the Institute for Fiscal Studies has warned.

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He added: "I need to be straight with the House: a no-deal Brexit would deliver a significant short- to medium-term reduction in the productive capacity of the British economy". "That is not what the British people voted for in June 2016", he said.

"The forecast changes and policy decisions leave (Hammond) with £26.6 billion (1.2 per cent of GDP) of headroom against his fiscal mandate", the OBR said.

Mr Hammond also used the statement to announce a number of extra funding boosts for Scotland, including £65 million towards the borderlands growth deal for local authorities in the Scottish Borders, Dumfries and Galloway, as well as £79 million for a new national supercomputer in Edinburgh.

He repeated his forecast that there would be a Brexit deal "dividend" as companies regained confidence and he could choose between increased spending on public services, capital investment and keeping taxes low while also bringing down debt.

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Mr Hammond said rejecting an immediate no-deal Brexit and extending Article 50 could help find a "deal we can collectively support".

The growth prediction for 2020 was kept at 1.4%, and the OBR sees an acceleration in the following year.

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