PHILIP Hammond has claimed there is “light at the end of the tunnel” for the first time since the financial crisis – but the SNP’s Ian Blackford hit back describing the UK economy as a sinking ship.

In his spring statement, the Chancellor suggested he would be able to end austerity and increase public spending in the autumn budget.

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He pointed to figures from the Office for Budget Responsibility (OBR) upgrading growth projections and forecasting falls in government borrowing and national debt over the coming years.

But the OBR warned that if the Chancellor wants to reach his target of returning the public finances to overall balance by the middle of the next decade, cuts in spending on services will have to continue every year in real terms.

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The OBR also calculated that Britain will continue to pay contributions into the EU budget until 2064 – 45 years after the official date of Brexit. They said the total “divorce bill” would amount to £37.1 billion.

Hammond said forecasts showing debt to be one per cent lower than expected at the time of last autumn’s Budget, and an upgrade in predicted GDP growth for 2018 by a 10 of a percentage point to 1.5 per cent, confirmed the pursuit of austerity had been justified: “The first sustained fall in debt for 17 years, a turning point in the nation’s recovery from the financial crisis of a decade ago. Light at the end of the tunnel.”

He told MPs: “If, in the autumn, the public finances continue to reflect the improvements that today’s report hints at, then ... I would have capacity to enable further increases in public spending and investment in the years ahead, while continuing to drive value for money to ensure that not a single penny of the taxpayers’ precious money is wasted.”

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However, the OBR suggested growth will remain virtually static in the following years, at 1.3 per cent in 2019 and 2020, 1.4 per cent in 2021 and 1.5 per cent in 2022.

That would represent the first time since 1875-79 that the UK economy had grown by 1.5 per cent or less for five successive. The OBR also said there is now a 50-50 risk of a recession in the next five years.

Blackford criticised the Chancellor’s failure to prepare for the cost of Brexit.

The SNP’s leader at Westminster said: “More austerity, and no real contingency for the billions of pounds Brexit will cost us – this Tory Government thinks it can do anything it wants to Scotland and get away with it.

“The progress of this Government in readying for Brexit has been nothing short of shameful.

“Its own analysis tells us that under all scenarios, Scotland would suffer a relatively greater loss in economic output than the United Kingdom as a whole.

“A no-deal scenario would be devastating, threatening to reduce growth by a massive nine per cent over 15 years.”

Blackford continued: “Make no mistake that a hard Brexit is going to hit the pockets of families, is going to lead to a loss in tax revenue expectations.

“It’s therefore going to affect spending on public services, and yet the Chancellor is silent on the risks to our economy, risks to our economy, when the stresses and strains of a near- decade of austerity is hurting. The fact is, Scotland is shackled to a sinking ship.”

Hammond responded: “A matter of rather more immediate urgency for the people of Scotland will be how their economy will withstand the highest rates of taxation in the United Kingdom.

“It is an economy that, under the SNP Government, is already growing more slowly than the economy of the United Kingdom. I don’t know about sinking ship. It’s about keeping afloat, I’d suggest to him.”