Brexiteers furious at Chancellor's gloomy economic forecast

Independent experts will deliver their verdict on the mini-Budget amid a backlash by senior Tories over damning assessments about the impact of Brexit on the economy.

Philip Hammond confirmed he was abandoning plans to achieve a budget surplus by the end of the decade after revealing the country is set to take a hit of almost £60 billion over the coming five years as a result of the referendum vote to leave the European Union.

The Chancellor set out how the Office for Budget Responsibility had slashed growth forecasts and predicted higher than previously expected borrowing.

But former Cabinet minister Iain Duncan Smith, a leading Leave campaigner, said it was "another utter doom and gloom scenario" by an organisation "that simply hasn't got anything right".

"The key thing is that the OBR has been wrong in every single forecast they've made so far," he told the Daily Telegraph. "On the deficit, on growth, on jobs, they've pretty much been wrong on everything."

Conservative MP Jacob Rees-Mogg said the OBR was "wrong" because it had taken "lunatic" assumptions about future trade tariffs and likened experts to soothsayers.

"Until the Government has developed its negotiating strategy and explained it the OBR can only operate on a status quo assumption," he told BBC Two's Newsnight.

"So, they are perfectly rational in what they are doing but it is not what the reality will be."

He added: "Experts, soothsayers, astrologers are all in much the same category."

But former Labour leader Ed Miliband criticised Leave campaigners for their attacks on the watchdog.

He said: "Now Brexiteers attack OBR. They can't win argument for hard, destructive Brexit based on truth so have to try and win based on fantasy."

Respected economic think thank the Institute of Fiscal Studies will give its assessment of the Chancellor's policies in an in-depth analysis of the plans later.

Labour said the Autumn Statement placed on record the "abject failure of the last six years".

The OBR said the Government could be expected to borrow £122 billion more over the five years to 2020/21 than it predicted at the time of the Budget in March - three months before the Brexit vote. And it said that some £58.7 billion of this was directly attributable to the referendum result and the cost of leaving the EU.

Of this, some £16 billion would be caused by lower immigration, said the OBR - though it added the figure, largely caused by the loss of taxes which migrants would otherwise pay to the Treasury, would be even higher if the Government achieved its ambition of reducing net migration to the tens of thousands.

However, its calculations did not include any gains from ceasing contributions to the EU's budget, currently running at around £13 billion a year.

Overall, the OBR predicted potential economic growth over the five-year period would be 2.4 per centage points lower than if the UK had voted to Remain in the EU. It downgraded growth for next year from the 2.2 per cent forecast in March to just 1.4 per cent and for 2018 from 2.1 per cent to 1.7 per cent.

Mr Hammond said the slowdown was due to "lower investment and weaker consumer demand, driven, respectively, by greater uncertainty and by higher inflation resulting from sterling depreciation".

In an illustration of how sharply the public finances have deteriorated since March, the OBR forecast that rather than the £10.4 billion surplus Mr Osborne had been hoping to achieve in 2019/20, the UK will still have a deficit of £20.7 billion at the end of a decade of austerity.

The national debt will breach the symbolically important 90 per cent of GDP mark in 2017-18.

Mr Hammond set out new fiscal rules which will require him to balance the books "as early as possible in the next Parliament", to get the structural deficit below 2 per cent and debt falling as a share of GDP by the time of the next election and to cap spending on welfare.

Press Association