Brexit secretary confirms divorce deal expected by mid-November

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He insisted he was not "abandoning fiscal rectitude", and said the deficit will decline in every year of the forecast period.

The OECD's aim is to reach agreement by 2020 but Hammond said progress had been "painfully slow", and it was "clearly not sustainable or fair that digital platform businesses can generate substantial value in the United Kingdom without paying tax here".

In a move created to put the United Kingdom at the forefront of worldwide action to adapt tax systems to the digital age, the Chancellor announced a £400 million levy aimed at internet giants such as Google and Facebook.

John McDonnell has come under fire from within Labour ranks after backing Philip Hammond's income-tax cuts for millions of people.

In the last scheduled Budget before Brexit, Mr Hammond said: "We are at a turning point in our history and we must resolve to go forwards, not backwards and work together to build a Britain we can all be proud of".

Despite Mr Hammond's claims that the economy has "turned a corner" on the way to the end of austerity, Mr Johnson said that Monday's Budget was "no bonanza" for public services other than the NHS.

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

Speaking in Paris, Ireland's foreign minister Simon Coveney said he believed a deal was possible, but was less positive a solution had been found on how to stop physical infrastructure being installed on the Northern Irish border in the absence of a trade deal.

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The increase to £12,500 means a basic rate taxpayer will pay £1,205 less tax in 2019-20 than in 2010-11.

Hammond also announced a funding boost for Universal Credit, with £1bn over five years to ease the transition of benefit claimants from the legacy benefits system to the new system.

Most of the divorce deal with Brussels is agreed but talks remain stuck on how to avoid new checks on Britain´s land border with EU member Ireland after it leaves the bloc´s single market and customs union.

"All of the spending commitments that the Chancellor will set out today are funded irrespective of a deal", said the PM's spokesman.

In response to the security threats facing the UK, Mr Hammond promised an extra £1 billion to the Ministry of Defence and £160 million to fund counter-terrorism policing. The one-off capital payment would average £10,000 per primary school and £50,000 per secondary school, he said.

A £420 million fund will help local highway authorities fix potholes and carry out other maintenance tasks.

He said the Tories had lost their majority in 2017 by trying to "out-Ukip Ukip" and "we aren't going to win the next election by trying to out-Corbyn Corbyn".

The Chancellor said the "era of austerity is coming to an end", and added: "The hard work of the British people is paying off in hard cash in their pockets". "It was a sticking plaster Budget, when major surgery lies ahead".