George Osborne scraps controversial pledge to hit budget surplus by 2020

The Chancellor has ditched his highly-prized target of running a surplus by 2020 after "clear signs" of shock in the UK economy emerged in the week since the referendum result.

Explaining the move, George Osborne said we must be "realistic about achieving a surplus by the end of the decade".

The decision follows predictions from economists of an economic slowdown and potentially another recession in the wake of the Brexit vote. That would make it impossible for any government to drum up to make a surplus a reality within four years without tax hikes or further austerity.

"As the governor (of the Bank of England) has said: the referendum is expected to produce a significant negative economic shock to our economy. How we respond will determine the impact on jobs and growth," Osborne said.

"We must provide fiscal credibility, continuing to be tough on the deficit while being realistic about achieving a surplus by the end of the decade.

"That's exactly what our fiscal rules are designed for."

Theresa May, who is frontrunner to replace David Cameron as Conservative party leader and Prime Minister, has already said she will not stick to the goal, the viability and suitability of which has long been questioned by economists.