Theresa May insists Chancellor's give-away Budget not precursor to snap general election

The package prompted speculation that the Conservative Government was preparing the way for a snap poll to provide the Prime Minister with a solid Commons majority as Brexit comes into effect in the spring.

Asked at a press conference in Oslo – where she is attending the Northern Future Forum - whether or not she was planning to ask voters to go back to the polls, Mrs May responded emphatically: "No. We are not preparing for another general election. That would not be in the national interest."

The forum is being attended by a number of north European states and will be followed by a meeting of the Nordic Council, which the PM will address.

Mr Hammond 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, Mr 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."

The Chancellor suggested that a good Brexit deal could trigger more tax cuts and increased public service spending.

"Because there will be a benefit to the economy from getting that deal, I hope we will be able to do a little bit better still than I set out yesterday, with a bit more money for public services when we have our spending review next year, and perhaps a bit more available going forward for some more tax cuts."

His Labour Shadow John McDonnell claimed the Budget could indeed signal a general election ahead.

He told ITV's Good Morning Britain: "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."

Mr McDonnell dismissed the Chancellor's claim austerity was coming to an end as he insisted it was "rolling out still".

“People will be crushingly disappointed at yesterday because it certainly wasn't the end [of austerity]," he said.

The Shadow Chancellor confirmed Labour would support Mr Hammond's tax cuts but make the system fairer if the party won power.

Paul Johnson, who heads the highly respected economic think-tank, the Institute for Fiscal Studies, said the Chancellor 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. He has abandoned any idea of getting to budget balance by the mid-2020s."

Mr Johnson said there were big increases in NHS spending over the coming years but "he hasn't found any money" for other public services.

Mr Hammond responded by noting how the budget deficit would decline in every year of the forecast period and declared: "We retain an ambition to balance the budget."

He dismissed suggestions that he had chopped down the "magic money tree" and burnt the lot.

The Chancellor told Today: "You are painting a picture here that is designed to show that I'm abandoning fiscal rectitude. I'm not."

He defended his decision to increase income-tax thresholds in a way which benefited the wealthy more than the worse-off.

Many middle-income workers in schools, hospitals and police services had been dragged into the higher rate of tax, noted Mr Hammond, adding: "It's important to raise all of these thresholds.”

One effect of raising the 40p higher rate of tax threshold from next year to £50,000 for middle earners south of the border means the tax differentials between England and Scotland are growing as the Scottish Government introduces its own rates and bands.

Derek Mackay, the Scottish Finance Secretary, is due to give his Budget in December. He argued that his changes earlier this year to the Scottish tax system, including introducing a new 19p starter rate, made income tax north of the border more progressive.

But his Conservative opponents complained that Scotland was already the “highest taxed part of the UK” and insisted the case for more SNP tax rises in the Scottish Government forthcoming Budget was unsustainable.

Asked about the widening gap on income tax between Scotland and England, the PM’s spokeswoman simply referred reporters to the Treasury.

Asked if there was any concern that the differing tax systems across the border were weakening the Union, she pointed to a range of measures in the Budget, which benefited all corners of the UK.

The policies announced in Mr Hammond's third economic statement amounted to a £100bn loosening of the purse-strings over a six-year period.

But the spectre of a no-deal Brexit hung over the 72-minute speech with the Office for Budget Responsibility 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, it noted, given the lack of precedent."

Setting out his income tax cuts, the Chancellor not only mentioned the threshold rise for the higher rate of income tax but also said the personal allowance would rise to £12,500 from April 2019. The changes had been due to come into force in 2020.

Mr Hammond said it would put "£130 in the pocket of a typical basic rate taxpayer". The Treasury calculated the cumulative effect of increases in tax thresholds since 2010 at £1,200 for basic rate payers and £1,800 for those paying the higher rate.

The Chancellor set out a five-year plan for departmental spending which will see Whitehall budgets rise by an average of 1.2 per cent a year.

Detailed figures made clear that the lion's share of this extra funding will go to the Department of Health to pay for a £20.5bn boost to NHS spending in England, while other departments see their budgets rise in line with inflation.

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

As well as giving, there was some taking.

In a move designed to put the UK at the forefront of international action to adapt tax systems to the digital age, the Chancellor announced a £400m levy aimed at internet giants such as Google and Facebook.