Defending his Budget proposals, the Chancellor said his decision to set aside a £3billion war chest to ensure the country is ready for leaving the EU was “not an optional piece of expenditure”.

Rejecting criticism of the Brexit fighting fund, he insisted the cash was needed for strengthening our borders and preparing a new customs system.

Ministers had an “absolute obligation” to be ready for “all foreseeable outcomes” – including failure to reach an exit deal.

Mr Hammond said the £3billion announced in the Budget came on top of £700million already earmarked for Brexit. 

The money will be used to improve the abilities of customs and border staff to bring in new arrangements for goods and people arriving in the UK after leaving the single market, he said.

Money will also be spent by Defra to monitor and control produce and livestock travelling into the UK from the EU.

Mr Hammond told LBC Radio: “If we need more money, we will find more.

"This is not an optional piece of expenditure. We don’t want to see chaos at our ports or at our airports because we haven’t prepared for the new arrangements.”

Speculation about a rift between Mr Hammond and Theresa May eased yesterday after she praised his Budget and said he had done “a very good job”.