General election ‘not in the national interest’ says May

Chancellor Phillip Hammond used the statement to announce a £100 billion loosening of the purse-strings, with income tax breaks for 32 million voters, help with business rates for the high street, support for Universal Credit and the promise of increased public spending over the coming years.

The package prompted speculation that the government was preparing the way for an early general election to provide May with a solid majority in the House of Commons as Brexit comes into effect in the spring.

Asked at a press conference in Oslo whether she was planning to ask voters to go back to the polls, Theresa May responded emphatically: ‘No. We are not preparing for another general election. That would not be in the national interest.’

The chancellor also insisted that his Budget tax cuts and spending hikes were not intended to woo voters ahead of an early poll.

Asked if the giveaway Budget was a marker for a possible general election, Hammond told ITV’s Good Morning Britain: ‘I hope not. What we are preparing for is Britain’s future.

‘We’ve now turned a corner and we are able to give Britain a bit of good news.’

Shadow chancellor John McDonnell said the Budget could signal a general election ahead.

He said: ‘The Tories usually do this. If a general election is coming, what they’ll do is they’ll splash out some money and then if they win the election they then start cutting it back again.’

McDonnell dismissed the chancellor’s claim austerity is coming to an end as he insisted it is ‘rolling out still’.

He said: ‘I think people will be crushingly disappointed at yesterday because it certainly wasn’t the end (of austerity).’

Paul Johnson, director of the Institute for Fiscal Studies, said Mr Hammond had ‘got lucky’ because tax revenues were better than expected.

He told BBC Radio 4’s Today programme: ‘He’s just simply decided to spend all of that. I think he has abandoned any idea of getting to budget balance by the mid-2020s.’

The spectre of a no-deal Brexit hung over the 72-minute statement, with the Office for Budget Responsibility (OBR) warning that failure to reach agreement with Brussels would hit the economy hard.

A disorderly Brexit ‘could have severe short-term implications for the economy, the exchange rate, asset prices and the public finances’, warned the government’s independent forecaster.

‘The scale would be very hard to predict, given the lack of precedent.’

Downing Street insisted the spending pledges were fully funded, irrespective of the outcome of Brexit talks.