He r ejected idea Emergency Budget would be needed in wake of EU exit

Philip Hammond said the extra cash could be ploughed into infrastructure projects in a sharp change of course from the George Osborne years

Philip Hammond yesterday dropped a heavy hint that the Government was prepared to borrow billions of pounds extra to help the economy adjust to the 'shock' of Brexit.

The new Chancellor said the extra cash could be ploughed into infrastructure projects in a sharp change of course from the George Osborne years.

In his first comments since replacing Mr Osborne in No11, he also confirmed that the May Government had junked the target of eliminating the deficit by the end of the current Parliament.

And he flatly rejected the idea that an Emergency Budget would be needed in the wake of the vote to leave the EU.

At the height of Project Fear, Mr Osborne claimed tax rises and spending cuts totalling £30billion would be needed within weeks if the nation voted for Brexit.

But Mr Hammond said no hasty action was needed before the autumn statement, which is four months away. Theresa May has already said there will be no tax rises to fill any hole in the nation's finances.

In his first full day as Chancellor, Mr Hammond met Bank of England chief Mark Carney. He said he hoped to work with him over the summer and reassured companies that the Government would take a 'pragmatic approach' to Brexit that would 'protect the British economy'.

He sketched out how the Government plans to support the economy if there is a downturn in coming months – including borrowing more.

The Chancellor, who has been a staunch advocate of austerity, said: 'Borrowing when the cost of money is cheap has some great attractions, but this country is already highly indebted and we need to be very careful about the signal we send to markets about our intentions.

'It's about getting the balance right and making sure that we borrow and invest wisely where we can make big impacts on Britain's productivity and thus get a return on that investment that will be to the benefit of the Exchequer.

'We've said we are no longer tied to the commitment to bring the public finances into balance by 2020.'

The new Chancellor confirmed that the May Government had junked the target of eliminating the deficit by the end of the current Parliament

Mr Hammond, who voted to Remain, said the Brexit result had led to some businesses putting off decisions. He said the best way to deal with this was to set out clearly and quickly how Britain planned to continue trading with the EU.

The former Foreign Secretary said: 'There's no doubt the shock, the surprise of the decision taken by the British people has had a dampening effect on the economy. It's caused at least a temporary loss of confidence, it's caused investment decisions to be put on hold.'

Tory MPs who voted for Brexit are watching Mr Hammond's language closely. They insist the Government should not backslide on the wishes of the British people to end the free movement of EU migrants in order to gain access to the single market.

The Chancellor told Sky News the UK would leave the EU single market but negotiate access to it.

Mr Hammond flatly rejected the idea that an Emergency Budget would be needed in the wake of the vote to leave the EU

He added: 'There's a lot of work now to do. The Prime Minister made clear we will do an autumn statement in the usual way and look carefully over the summer at the situation.'

Owen Paterson, the former Cabinet minister, yesterday warned there should be no watering down of the public's desire to quit the Brussels club.

'Public faith in political establishment now depends on delivering full Brexit,' he said.

Mr Osborne made eliminating the deficit by 2020 central to the Government's economic strategy. Originally, he had planned to get the nation's current account back in the black by 2015 but the target kept drifting backwards.