George Osborne has said he will abandon his budget surplus rule.

The chancellor announced 2015 that he would bind future governments to maintaining a budget surplus when the economy is growing.

The rule was designed to legally prevent future governments from spending more than they received in tax revenue when the size of the economy was increasing.

Andrew Tyrie MP, chairman of the Treasury Committee, said: “The Chancellor was right to abandon the fiscal rule. It’s the latest in a long line of fiscal rules, targets and objectives of successive governments to have bitten the dust.

“Any rule which required the Chancellor to adjust public spending or taxation twice a year to take account of small changes in the OBR’s forecasts was always likely to be vulnerable. To be credible it needed to be put in a longer term framework.

“The Bank now has the crucial task of doing what it can to maintain stability – they may be at it for some time.”