Philip Hammond has warned he will not relax his grip on the public finances, despite seeing “light at the end of the tunnel” for the economy after years of austerity.
Speaking ahead of the Spring Statement on Tuesday, the Chancellor said Britain’s debt mountain was still too high and had to be be brought down.
“There is light at the end of the tunnel because what we are about to see is debt starting to fall after it has been growing for 17 continuous years. That is a very important moment for us but we are still in the tunnel at the moment,” he told BBC1’s The Andrew Marr Show.
“We have a debt of £1.8 trillion - 86.5% of our GDP. All the international organisations recognise that is higher than the safe level.
“This isn’t some ideological issue. It is about making sure that we have the capacity to make sure that we can respond to any future shock to the economy.
“There will be economic cycles in the future. We need to be able to respond to them without taking our debt over 100% of GDP.”
Economists expect Mr Hammond will announce Government borrowing is set to be around £7 billion lower in 2017-18 than had been predicted when he unveils the latest forecasts of the Office for Budget Responsibility on Tuesday.
The Chancellor, however, made clear that he would not be making any changes to spending in his statement, and said he would continue to take a “balanced” approach to public finances, if there was any further room for manoeuvre.
“What I will be doing is signalling some areas where we want to consult ahead of the Budget in the autumn,” he said.