Philip Hammond has been fiercely criticised ahead of this week’s make-or-break Budget, after claiming: “There are no unemployed people”.

The Chancellor made the statement as he painted a rosy picture of an economy bouncing back from the long downturn, with both inflation and the deficit falling.

“Where are all these unemployed people? There are no unemployed people,” he asked, on the BBC’s Andrew Marr Show.

However, the most recent unemployment figures show the jobless count stood at 1.42m between July and September this year.

Labour seized on the gaffe, Shadow Cabinet Office minister Jon Trickett saying: “The Chancellor is living on another planet.

“The Tories have become even more out of touch and are now so inwards looking that they have no clue of the experiences of ordinary people suffering from 7 years of Tory austerity.”

The mistake comes at the worst possible time for Mr Hammond, as Theresa May continues to weigh up pressure from Brexit-backing Tories to sack him.

It is thought he only survived at the Treasury because the Prime Minister was too weak to remove him, after her general election debacle in June.

Mr Hammond’s comment came as he denied that his plan to put driverless cars on UK roads by 2021 would put taxi and truck drivers out of work.

“I remember 20 years ago we were worrying about what was going to happen to the million shorthand typists in Britain as the personal computer took over,” he told Mr Marr. “Well, nobody has a shorthand typist these days.

And he added: “Where are all these unemployed people? There are no unemployed people.

“We've created 3.5million new jobs since 2010. This economy has become a jobs factory, constantly reinventing itself, constantly creating new jobs and careers,” he argued.

Mr Marr himself described the Chancellor's comment as “extraordinary” and asked if the 1.42 million unemployed people had been “forgotten by the government”.

“No, they haven't been forgotten by this government,” replied Mr Hammond. “It was the last Labour government that abandoned the unemployed, ignored them, dumped them on welfare.”

Only later, speaking on ITV's Peston On Sunday programme, did Mr Hammond retract his comment, saying “Of course I didn't mean that [there is no unemployment].

“There's 1.4 million unemployed people in this country and that's 1.4 million too many. But we have record low levels of unemployment, it hasn't been this low since the 1970s.

“But the point I was making to your former colleague Andrew Marr is that previous waves of technological change have not resulted in millions of people being long-term unemployed.