Philip Hammond will borrow to provide £23bn of ‘highly targeted' funding for innovation over five years and signalled increased infrastructure investment from 2020.

In his Autumn Statement today, the chancellor repeatedly referred to gaps in productivity - both between the UK and other European countries, and between London and the regions. 

Mr Hammond announced a National Productivity Investment Fund (NPIF) for innovation and infrastructure worth £23bn over five years. 

The NPIF will be targeted at four areas that the Treasury described as ‘critical for productivity' - transport, digital communications, research and  development, and housing.

This was the only spending commitment in the statement funded by additional borrowing, rather than other fiscal measures such as tax cuts, the chancellor said.

Mr Hammond said he had written to the National Infrastructure Commission to advise it should assume that the Government would spend between 1% and 1.2% of GDP on infrastructure every year from 2020 until 2050. 

He added that current spending, measured according to the same definition, would be around 0.8%.

On digital infrastructure, the chancellor also confirmed a total of £1bn to ‘catalyse private investment in fibre networks and to support 5G trials'.

He announced that 100% business rates relief would apply to new fibre infrastructure for five years from April 2017. 

Mr Hammond said ‘Our future transport, business and lifestyle needs will require world-class digital infrastructure to underpin them so my ambition is for the UK to be a world leader in 5G.'

He also confirmed that funding for research and development will be £2bn per year by 2020, as announced by prime minister Theresa May this week.

Mr Hammond said his infrastructure spending would provide the ‘financial backbone to the Government's industrial strategy'.