But he insisted the economy remained "remarkably robust".
Growth forecasts in 2020 and 2021 stood at 1.4 and 1.6 percent respectively, compared with forecasts of 1.4 percent for both years made in October.
The forecasts were produced by the Office for Budget Responsibility, Britain's budget watchdog, and assumed that Britain would leave the European Union with a deal.
The projections allowed Philip Hammond, the chancellor, to bank £26.8 billion in lower borrowing over the next five years, which he pledged to use to cut taxes and raise public spending if parliament agreed a Brexit deal.
"I'm confident that we're going to do a deal", Hammond said on Brexit.
Chancellor of the Exchequer Philip Hammond (picture) issued a fresh warning that leaving the European Union (EU) without a deal would damage the United Kingdom economy and leave people less well off.
This is after parliament on Tuesday overwhelmingly rejected the country's draft Brexit divorce agreement with Brussels.
"Leaving with no deal would mean significant disruption in the short and medium term and a smaller, less prosperous economy in the long term, than if we leave with a deal", Hammond told parliament, warning of higher unemployment and prices and lower wages under a no-deal Brexit.
Borrowing is expected to be lower this year, coming in at £22.8 billion, down £2.7 billion since October, which the OBR put down to higher income tax receipts and lower debt interest spending. "That is not what the British people voted for in June 2016".
"Last night's vote leaves a cloud of uncertainty hanging over our economy and. our most urgent task in this House is to lift that uncertainty", Hammond said in his budget address.
MPs were expected to vote later today against a no-deal Brexit and then vote on Thursday in favour of the government seeking a delay to Britain's departure, now scheduled for March 29.
Responding to the Spring Statement, chairman of the LGA Lord Porter said: "The government's plan to publish the Spending Review alongside the Autumn Budget this year could exacerbate the funding challenges facing councils and will severely hamper their ability to plan ahead for next year and beyond".
With the Brexit deadline approaching on March 29 and no deal reached over the UK's departure, the government is stepping up economic contingency plans.