Britain’s Chancellor said yesterday that he was raising the minimum wage and taking the edge off a benefits squeeze for low earners, but that fixing the public finances would be a bigger priority as the country gets ready for Brexit.

In the first detailed economic policy announcement of the new government, Philip Hammond focused on tackling a still large budget deficit and injecting dynamism into the world’s fifth-biggest economy.

When he became Chancellor in July, a few weeks after the vote to leave the EU, Hammond said Britain might need a “fiscal reset”, raising the prospect of a big shift in economic policy towards more public spending or large tax cuts.

But so far, the economy has held up better than expected to the initial Brexit shock and Hammond said he wants to keep his powder dry for tougher times that probably lie ahead as Britain proceeds with its divorce from the EU.

The Treasury said that the minimum wage, known as the National Living Wage, would rise to £7.50 an hour from April. That is up from £7.20 now but represents only a small step towards an existing target of £9 by 2020.

The Treasury also said in a statement that low-paid workers would lose tax credits at a slightly slower pace as their earnings rise, softening some of the impact of a sharp rise in inflation caused by the Brexit hit to the pound.

In another attempt to address the frustrations of “just about managing” families, many of whom voted for Brexit and who have been promised help by Prime Minister Theresa May, Hammond said more homes would be available to low-income renters and buyers.

The government will earmark £1.4 billion of new funding to help build 40,000 new homes over the next five years. There will also be a crackdown on fees imposed on tenants, a bitter complaint of many renters.