Philip Hammond handed a £10billion budget boost as day-to-day public spending goes into the black for the first time since 2002

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Robust economic growth and bumper tax payments are set to hand Philip Hammond a budget boost of £10 billion, according to a report published today.

Wage growth is finally picking up and day-to-day spending by the state is back in the black for the first time since 2002 – giving the Chancellor a much-needed lift when he updates Parliament in next week’s Spring Statement.

A report by the Resolution Foundation today suggests total borrowing will be about £40 billion this year – nearly £10 billion less than the £49.9 billion pencilled in by the Office for Budget Responsibility just four months ago.

The rosy picture is an embarrassment for the independent OBR, the official Treasury watchdog, which steeply downgraded its forecasts for the UK at the time of the Budget in November. 

A report by the Resolution Foundation today suggests total borrowing will be about £40 billion this year – nearly £10 billion less than the £49.9 billion pencilled in by the Office for Budget Responsibility just four months ago

The OBR claimed then that borrowing would be £91 billion higher than previously expected over the next five years because productivity growth was much lower than it had hoped.

But strong tax receipts have since surprised economists. And the country has recorded its strongest six months for productivity in six years, taking growth up to 0.6 per cent for 2017 rather than the zero expected by the watchdog.

It means Britain’s current budget – which covers regular expenses such as for running hospitals, but not one-off capital expenditure such as the cost of building them – is at last back in surplus for the first time since 2002. 

This was one of former Chancellor George Osborne’s key targets and has been achieved two years later than hoped.

Britain’s current budget – which covers regular expenses such as for running hospitals, but not one-off capital expenditure such as the cost of building them – is at last back in surplus for the first time since 2002. This was one of former Chancellor George Osborne’s key targets and has been achieved two years later than hoped

Experts at the Resolution Foundation think-tank believe that overall public sector borrowing will come in at £40billion in this financial year. 

They added that pay growth looks to be improving, after near-stagnation since the financial crisis a decade ago.

Think-tank chief economist Matthew Whittaker said: ‘While the temperature has continued to fall, the economic picture has started to brighten and we should expect a slightly sunnier outlook next week.’