The European Commission has delivered a damning assessment of the British economy, undermining attempts by the chancellor to signal the end of austerity this week.

Philip Hammond claimed last night that the economy was “at a turning point” and that, after eight years of belt-tightening, “I am confident that there is light at the end of the tunnel” — a signal that ministers are prepared to put more money into public services.

But the EU’s annual assessment of the British economy paints a different picture. A leaked copy of the paper seen by The Sunday Times makes dire predictions for growth that are lower than those provided by the independent Office for Budget Responsibility (OBR), which help to determine Treasury plans.

“Economic growth in the