The Chancellor is expected to raise taxes in his Budget speech on Wednesday, as he tries to tackle the UK's deficit while building a fund to ensure a smooth Brexit.

But there will also be some spending, including a boost to Britain's digital economy.

As well as up to £270m for research and development for artificial intelligence, electric cars and new pharmaceutical research, Philip Hammond will announce new funding to support university places in science, technology and engineering subjects.

He will say his series of new measures are part of his strategy to increase innovation and productivity, in order to "Brexitproof" the UK in case the country encounters severe economic turbulence during and after the Brexit process.

Image: AI research is to receive a boost in the budget. File pic

The measures follow the Chancellor's announcement on Sunday of a £500m investment in technical education in an attempt to bring "genuine parity of esteem" between academic and vocational qualifications.


All of this, however, is pretty small beer when set against the enormous challenges around debt and deficit the Chancellor inherited, not from his Labour predecessors but from his immediate Conservative one, George Osborne.

The deficit and debt are still eyewateringly high.

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Bear in mind that under Mr Osborne's initial plans unveiled in 2010 the deficit should have been cleared all the way back in 2015.

Under Mr Osborne's revised plans published before the Brexit vote in June, the deficit should have been eliminated in 2019.

That's now been pushed back to 2022 - seven years behind schedule.

The debt now stands at £1.7trn or, if that's a bit too much money for you to reckon with, about £26,000 for every man, woman and child in the UK.

Therefore, there are going to be no big giveaways in this Budget for technology or anything else.

Where he can prioritise spending, the Chancellor has made clear that he's going to try and use it to boost productivity.

But many chancellors have tried and failed to boost the chronic curse of Britain's productivity problem even in the good times.

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With Brexit looming, Mr Hammond needs to succeed where so many of his predecessors have not.

So the Chancellor has a balancing act to perform.

He has to convince the markets he's serious about cutting the deficit whilst also starting to map out how he intends to protect and enhance the British economy as we navigate the treacherous rapids of the Brexit process.

Doing just one of those things would be a Herculean task.

Doing both at the same time might prove impossible.

:: Watch full coverage of the Chancellor first Budget on Wednesday on Sky News from 10am