Philip Hammond could reveal an improvement in the public finances worth as much as £11bn when he delivers next week’s spring statement, according to analysis of official figures.

The chancellor is set for a dual economic boost from the improving productivity of British workers and a leap in tax returns according to the Resolution Foundation thinktank, which looked at data from the Office for National Statistics to produce its own estimates ahead of the spring statement on Tuesday.

The prospect of a rosier snapshot for the economy comes after a painful downgrade for Hammond from the government’s own economic forecaster, the Office for Budget Responsibility, at the November budget.

The latest readings on the economy show the country has beaten some of the OBR’s gloomier forecasts to give the chancellor a spring fillip.

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The Resolution Foundation said a jump in self-assessed tax receipts received by the Treasury had put Britain on course to undershoot the OBR’s forecast for the deficit – the difference between government spending and the income from taxes – to reach £49.9bn this financial year, up from £45.7bn in the previous 12 months.



The latest figures from the ONS show that borrowing for the year to date is at its lowest levels since the financial crisis. The outcome for the financial year as a whole could be between £7bn and £11bn lower than first thought, the thinktank said.



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Hammond is also likely to have benefited from two of the strongest quarters for productivity growth in six years, amid signs that the measure of economic output per hour of work is finally beginning to improve after a decade of sluggish growth.

While the growth in efficiency rates still remains below the pre-financial crisis trend of about 2% per year, productivity growth in 2017 came in at 0.6%, against an expectation for zero improvement from the OBR.

An upswing in the global economy has also boosted economic growth in Britain, amid rising demand for goods and services around the world, helping to offset a slowdown at home sparked by rising inflation after the pound’s weakness since the Brexit vote. As a result, GDP growth in 2017 came in at 1.7%, rather than the 1.5% projected by the OBR.



Hammond is attempting to make the spring statement a low-key event to prioritise the importance of the autumn budget as the year’s major tax and spending showpiece.



“There will be no red box, no official document, no spending increases, no tax changes,” a spokesman for the Treasury told the Financial Times last month. “The chancellor will publish updated economic forecasts; we expect the speech to last between 15-20 minutes.”



Some changes are still pencilled in to take effect over the coming weeks following the spring statement. About 11 million families will experience the impact of a freeze on benefits from 9 April, although some 1.5 million workers will also see a 4.4% pay rise when the national living wage increases to £7.83 on 1 April.



The Resolution Foundation estimates a couple with two children are set to lose £315 on average, while overall benefit changes coming into effect are set to result in an average £135 income loss for the poorest third of households. The richest third of households are largely unaffected by the changes.

There are still storm clouds on the horizon from Brexit, and long-term challenges for improving workers’ pay and household living standards, despite the short-term picture of improvement.



Matthew Whittaker, chief economist at the Resolution Foundation, said: “While the chancellor is firmly committed to a short spring statement, the challenges Britain faces, from weak growth to tight family finances, are likely to remain long lasting.”

