The chancellor has been accused of "complacency" as he celebrated "marginal" improvements in the economy.
Philip Hammond promised there was "light at the end of the tunnel" after years of austerity.
But there was no new money for the ailing NHS, social care or struggling councils.
And the growth he announced for the UK is the lowest in any of the G7 nations.
The chancellor said he will increase public spending and investment in years ahead if public finances continue on this improved path and he insisted he was not somebody who believes "every available penny should be used to reduce the deficit".
He told MPs: "If, in the autumn, the public finances continue to reflect the improvements that today's report hints at, then ... I would have capacity to enable further increases in public spending and investment in the years ahead, while continuing to drive value for money to ensure that not a single penny of precious taxpayers' money is wasted."
But the shadow chancellor hit out at Philip Hammond's complacency and accused him of making political choices.
John McDonnell said: "We face - in every public service - a crisis on a scale we've never seen before".
“People know now that austerity was a political choice - not an economic necessity,” he said.
“The Conservatives chose to cut taxes for the super-rich, the corporations and the bankers. And it was paid for by the rest of us in society.
“We were never all in this together as they claimed - never.”
Mr Hammond also gave support to a pay rise for NHS staff above the
We are expecting the pay offer to NHS staff shortly – forced upon him by the Labour Party’s and Trade Unions’ campaigns against the pay cap.
In his first spring statement to the House of Commons, Mr Hammond revealed that the Office for Budget Responsibility now expects state borrowing to be £45.2 billion this year - some £4.7 billion lower than predicted in November and £108 billion lower than in 2010.
The Government is set to run a "small" surplus on day-to-day spending in 2018/19, borrowing only for capital investment, said the Chancellor. And the Government is forecast to hit its borrowing target for 2020/21 with £15.4 billion headroom.
Hammond described the assessment as a "turning point in this nation's recovery from the financial crisis" and he used the opportunity to attack Labour accusing them of "decimating" the UK economy.
Mr Hammond said there had been "solid progress towards building an economy that works for everyone" with growth every year since 2010.
And he accused Labour of "relentlessly talking Britain down" with "doom and gloom about the state of the nation".
But John McDonnell hit back describing the chancellor's claim as a "bit rich coming from a Party that has increased the debt by over £700 billion".
He said: "This loads the equivalent of an additional £22,000 on every household in this country.
"It’s worth remembering that this is the Party that promised to eliminate the deficit completely by 2015, then 2016, then 2020."
Critics of Brexit argued that leaving the bloc was putting a dampener on economic optimism.
Alison McGovern, a Labour MP on the Treasury Select Committee, said the growth figures announced by the Chancellor were the worst in the OECD, and added: "Imagine what we could do if it weren't for Tory hard Brexit."
And Chuka Umunna wrote that growth in each of the three years ahead "is forecast to be far lower" than what was projected before the EU referendum, which he said was "thanks to Brexit".
Commenting on the Spring Statement UNISON general secretary Dave Prentis said: “The Chancellor might have promised a brighter tomorrow, but the country’s beleaguered public services remain in a dark place today.
“He paints a picture a world away from the everyday experiences of ordinary families, and our cash-strapped NHS, schools and community services.
“The one ray of hope for public services was the heavy hint that the Treasury will fund an NHS pay rise, should employers and health unions be able to reach agreement.”