The prime minister has announced the end of austerity – promising “better days ahead” – and Philip Hammond is the man who has to make the numbers add up.
To complicate things further, the Brexit negotiations create almost unprecedented uncertainty.
When I sat down with the chancellor to interview him for Sophy Ridge on Sunday, he could not have been clearer.
“The approach that I’m going to be setting out tomorrow is based on the assumption, as is the OBR’s (Office for Budget Responsibility) report, of a deal being done with the EU and us continuing to be able to trade on reasonable terms with our closest neighbours in Europe,” he said.
In other words – if there is not a deal (or if there is a different deal), the picture will dramatically change. So much so, that another budget would be needed.
Mr Hammond continued: “If we don’t get a deal, if we were to leave the EU without any deal – and I think that’s an extremely unlikely situation, but of course we have to prepare and plan for all eventualities as any prudent government would – then we would need to take a different approach to the future of Britain’s economy.
“We would need to look at a different strategy and frankly we’d need to have a new budget that set out a different strategy for the future.”
What would that strategy be? We can only speculate.
But one theory would be moving the UK towards a so-called Singapore economic model, by cutting taxes and regulation to attract business investment.
Such a move would be likely to infuriate EU leaders and divide opinion in the UK.
Speaking on Sophy Ridge on Sunday, shadow chancellor John McDonnell said: “When you asked him about Brexit, I was really shocked.
“He’s gone back to what he said some time ago which is basically he seems to have accepted a no-deal Brexit and he does want us to be like Singapore, a sort of tax haven, which will undermine our manufacturing base and I think put people’s living standards at risk.”
In contrast, the Brexit-supporting Conservative MP Jacob Rees-Mogg told me the chancellor should shake up the economic model regardless of the Brexit deal.
“There are lessons we can learn from other countries about the economic approach we could take,” he said.
“Look what’s happened in America with the significant tax cuts a year ago and an absolutely booming economy. If you cut taxation, you can have more money available for public services, a lower deficit and better economic growth.
“So I think that’s an opportunity that should be taken regardless of Brexit.”
This week’s budget will be a crucial opportunity for the chancellor to pull the fiscal levers that he has available.
But it may be that next year’s spending review is even more important – when we finally know at least part of the answer to what our future relationship with the EU will look like.
:: Watch the budget live on Sky News at 3.30pm on Monday
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