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Sajid Javid was today warned he may have to re-impose a second wave of austerity if Britain crashes out of the EU within weeks.

Leading economists believe the Chancellor can today rightly declare an “end to austerity” but that he may run out of money within two or three years for his planned extra spending if there is a no-deal exit.

The Institute for Fiscal Studies also stressed that Mr Javid may have less money to play with than realised, as the independent Office for Budget Responsibility was not expected to deliver an updated verdict on the economy with the Chancellor’s Spending Review today.

Speaking ahead of Mr Javid’s Commons statement, IFS director Paul Johnson said: “I’m sure he will say this is an end to austerity, I’m sure he will intend to increase spending.”

However, he added: “The big risk here is that we end austerity and start to increase spending but perhaps because of a no-deal Brexit the economy really slows, the deficit starts ballooning again ... we get two or three years of an end to austerity and then we have to say ‘we are going to have to re-impose austerity a second time’.”

Forecasts from the OBR in the spring suggested the Government would be able to borrow around £15 billion to boost spending and still stick to its fiscal rules. But Mr Johnson believes this “headroom” has got smaller due to the slowing economy which actually shrank between April and June by 0.2 per cent.

“If we do get no-deal, then of course he is going to lose all that headroom and considerably more,” he said.

Mr Javid was today set to announce an additional £2 billion of Brexit funding for Whitehall departments as the Government ratchets up plans for Britain to quit the EU by October 31, with or without a deal.

The extra funding will include money for the Home Office to support Border Force capability and for the Business department to explore developing the UK’s own global navigation satellite system. This will bring the total spent on planning for and delivering Brexit since the 2016 referendum to more than £8.3 billion.

Mr Javid said the new funding “will ensure that departments can grasp the opportunities created by Brexit after we leave on October 31”. The Government has already announced extra money including £1.8 billion to improve NHS patient care, with £800 million going to 20 hospitals in most urgent need, £210 million for training opportunities for frontline NHS staff, a multi- billion boost for schools and £5 million to help service veterans. Another think tank, the Institute for Government, expects the Chancellor to focus on money for populist measures ahead of a looming general election.