What is Philip Hammond’s 'balanced budget'?

Credit: PA

So just in case you've been anxious, the Office for Budget Responsibility will say in the budget on Wednesday that the Chancellor remains on course to hit his target of reducing the structural deficit, annual borrowing, to less than 2% of GDP or national income by 2020-21.

Or to put it another way, Philip Hammond has resisted the siren calls from some of his parliamentary colleagues for house-building, public-sector pay and NHS spending splurges - as was abundantly clear from the interviews he gave over the weekend, including to Peston on Sunday.

Hammond told me yesterday that his budget would neither be "big or boring" but would be "balanced" - though I assume he didn't mean that in the fiscally literal sense of all new spending being matched by tax and revenue-raising measures.

What he seemed to be implying was that there would be a modest relaxation of constraints in all three of these most politically charged drains on the public purse (so possible loan guarantees for small housebuilders, and more scope for local authorities to borrow to finance the building of council homes; a bit of extra money for public sector workers; meeting the boss of the NHS in England half way on his request for lots of extra dosh).

Remember that after the UK voted for Brexit, the government abandoned its earlier commitment to balance the books by 2020 - because it (rightly) feared that growth in the economy and in tax revenues would be dented by the decision to leave the EU.

After the EU referendum the government abandoned its commitment to balance the books by 2020 Credit: PA

Hammond has concluded that dropping his own less demanding target of reducing the deficit to below 2% would leave him and the Tories looking rudderless in a fiscal sense - which he thinks would have economic and political costs (he may be wrong).

But that means he can't be a generous spender, unless he were to put up taxes significantly - and Theresa May simply doesn't have the numbers in Parliament to be confident of winning votes on tax increments.

It is quite striking that the combination of uncertainty about the economic consequences of Brexit, and the loss of the Tory majority in the last election, means that an EU referendum that was supposed to be all about taking back control has given us a Chancellor and Treasury less powerful than almost any I can recall.