Philip Hammond has warned that austerity will only end if the government can negotiate a Brexit deal with the European Union.
The chancellor said plans to increase public spending may be dropped if Britain leaves with no deal.
He said that Office for Budget Responsibility projections, which the budget is based on, assume Britain will have a negotiated free trade deal.
“If we leave with no deal we would be in a different set of circumstances and it will require a different approach, a different response,” he told the Andrew Marr Show this morning.
“Once we get a good deal with the European Union and a smooth exit from the EU, we will be able to show the British people that the fruits of their hard work are now, at last, in sight,” Hammond said.
However, the chancellor also promised to put aside a reserve of borrowing power, a fiscal buffer to allow Britain to weather any problems.
“If the economy as the result of a no-deal Brexit, or indeed because of something else that we haven’t anticipated, needs support over the coming months and years, I have the capacity to provide that support,” he said.
Speaking earlier in the day, shadow chancellor John McDonnell said he was concerned about the prospect of no deal.
He said: “I’ve seen interviews with Philip Hammond today who seems to be edging towards what he said a short while back – no deal Brexit – I’m really worried about that, that’s the worst of all options. It could damage our economy and undermine jobs.
“We will do everything we can in parliament to make sure we get a deal that will protect jobs and the economy. And we’re saying to Theresa May: If you bring a deal back that will protect jobs and the economy, you’ve got our support. But if you can’t – move to one side and we’ll deal with it.”
Hammond said he was confident that the government would reach a Brexit deal, adding that “no one is more committed to getting a deal than me and the prime minister. This is absolutely in the best interest of the British people.”