The UK economy growing at a slightly faster rate than predicted in November and borrowing is down, Philip Hammond has said in his spring statement.
Growth will be 1.4% this year, 0.1% higher than forecast, with the forecast for 2019 and 2020 unchanged at 1.3%.
The chancellor said borrowing was due to fall in every year of the forecast – and told the House of Commons debt will fall as a share of GDP from 2018-19.
He added there was “light at the end of the tunnel” for the UK economy.
The chancellor is resisting calls from Labour and some Tories to use the extra cash from tax receipts to ease the spending squeeze they say is pushing the public sector to breaking point.
But the BBC understands the government has been discussing how to direct more money to the NHS in future.
Senior government figures have told the BBC’s political editor Laura Kuenssberg that cabinet ministers have been discussing ways to funnel more money to the NHS in England, including potential future tax rises or a specific tax for health.
While No 10 has publicly maintained the service has what it needs, one senior minister told Kuenssberg “we all accept” more cash is needed, while another said “it’s hard to see” how current funding levels could remain.
A Department of Health spokesman said: “The NHS was given top priority in the recent budget with an extra £2.8bn allocated over the next two years.”
In a break with recent tradition, the chancellor is not using the financial statement midway between Budgets to present a “mini-Budget” or pre-Budget report.
The Treasury says there will be no policy announcements or tax and spending measures, which will be held back to the Budget in the autumn.
Mr Hammond will launch a number of consultations to report in time for the autumn Budget, including on the impact of VAT on small businesses and the use of the tax system to cut plastic waste.
The VAT consultation could lead to a gradual introduction of the tax on firms with a turnover of more than £85,000 a year, according to the Daily Telegraph.
The newspaper says Mr Hammond wants the 20% rate to be introduced in “steps”.
Another consultation is expected to look at a possible tax on the profits of digital giants like Facebook and Google.
The chancellor is expected to reveal that tax receipts are covering day-to-day government spending for the first time since the 2008 financial crisis.
Labour’s shadow chancellor John McDonnell said: “Today the chancellor has a choice. He can choose to act and end the misery faced by many, or he can do nothing and continue to favour a privileged few.
“Our public services are at breaking point and many of our local councils are near bankruptcy.
“He needs to listen to the calls from across the political spectrum, including the Tory council leader in his own constituency – to end the financial crisis in our public sector.”
He said Mr Hammond “must use today to act and end austerity” and warned him against filling his statement with “boastful self-praise and not a recognition of the devastation faced by many in our country”.
Mr Hammond is also facing calls from his own side to call a halt to the public spending squeeze.
Conservative MP and former minister Gary Streeter said the government could afford to be “more generous” to well-organised councils as their funding has been “cut to the bone”.
Tory Brexiteer John Redwood has also argued that the chancellor can afford to borrow to invest in schools, defence and the NHS, and “start to think about how we spend that Brexit bonus that comes as soon as we stop sending so much money to the EU as contributions”.
The Scottish National Party’s economy spokeswoman at Westminster Kirsty Blackman said the chancellor should use the statement to address the uncertainty created by the UK’s planned withdrawal from the EU.
“The UK government is asleep at the wheel while Brexit has already started to hit the economy,” said Ms Blackman.