Philip Hammond promised Britain that “our best days lie ahead of us”, as he delivered an upbeat spring statement paving the way for a boost to public spending in the autumn.

Hailing a modest improvement in economic forecasts, and what he called a “turning point” in the public finances, the chancellor sought to shrug off his image as the cabinet’s Eeyore, insisting he was “at my most positively Tigger-like”.

He said if the public finances continued to improve, he could set aside more money for public services – a potential increase in spending that could be seen as a pre-election war chest.

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Hammond said he would use the budget this autumn to set out his expenditure expectations for 2020 and beyond, with a full spending review next year, after Brexit.

If in the autumn the public finances continued to reflect the improvements outlined on Tuesday, he said the government would “have capacity to enable further increases in public spending and investment in the years ahead”.



Hammond’s statement was received with cheers on the Conservative benches, with MPs increasingly concerned about the pressures on their local public services, including the NHS.

The chancellor said the economy was on track to grow a little faster than expected this year, despite the prospects for weaker growth in the medium term. Meanwhile, he said the budget deficit – the difference between public spending and income from taxes – was also set to beat expectations.

The independent Office for Budget Responsibility predicted GDP growth of 1.5% this year, a slight improvement by just 0.1% from the previous estimate made in November. The OBR also said it expected public borrowing would be £45.2bn this year – about £4.7bn lower than previously forecast.



The medium-term forecasts were less upbeat, however, with the OBR predicting economic growth of 1.3% next year (unchanged from last November’s forecast), 1.3% in 2020 (also unchanged), 1.4% in 2021 (down from 1.5%) and 1.5% in 2022 (down from 1.6%).



The chancellor said the latest estimates, which show public debt as a share of GDP falling for the next five years, showed the country was at a turning point, a decade on from the financial crisis.

“[There is] light at the end of the tunnel. Another step on the road to rebuilding the public finances decimated by the party opposite,” Hammond said.



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John McDonnell, the shadow chancellor, gave a robust response to the speech, criticising the “indefensible spectacle” of a chancellor “failing to lift a finger” to help struggling local authorities and the NHS.

“[He] proclaimed that there is light at the end of the tunnel. But this shows just how cut off from the real world he is,” McDonnell said. His speech was repeatedly interrupted with loud jeers from the Conservative benches, which he dismissed as “Tory bully boys”.

Hammond hit back, saying McDonnell affects the air of a “bank manager”; but every now and again “the mask slips”, revealing his “dangerous ideology”.

The chancellor had promised MPs a short speech of about 20 minutes to deliver the government’s first spring statement, deferring any tax and spending announcements to the budget, which has been moved to the autumn.



The government’s slender majority meant Hammond had limited room for manoeuvre and scant political cover for any missteps, meaning he was always likely to make few changes despite calls from Labour and some Tories to ease almost a decade of austerity.



The chancellor also announced a series of consultations, including a call for evidence on cracking down on plastic waste; and research by the Office for National Statistics into how to better measure human capital. Hammond’s spokeswoman said it would help the government to make better judgments about whether Britain needed “fewer bridges, more programmers”.

The OBR’s forecasts included the first assessment of how much Britain has promised to pay to the rest of the EU as part of the financial settlement after Brexit. It said about 75% of the £37bn “divorce bill”, as it has been dubbed, would be paid before 2022 – but small payments would continue until 2064.