The UK Government will provide £260m in investment for the Borderlands, including two Scottish council areas, the Chancellor has revealed.

Philip Hammond announced the funding as part of a growth deal covering Dumfries and Galloway and the Scottish Borders along with Carlisle, Cumbria and Northumberland.

It marks the first cross-border city and region deal in the UK and, along with £85m in funding from the Scottish Government, amounts to a £345m financial package over the next decade.

Unveiling his spring statement before MPs, the Chancellor also warned Brexit is casting a "cloud of uncertainty" over the British economy, after MPs rejected Theresa May's deal again on Tuesday night.

He said the UK's budgetary watchdog, the Office for Budget Responsibility (OBR), has forecast growth of 1.2% this year - a downgrade from the 1.6% forecast at last year's Budget.

Hammond told MPs: "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."

However, he insisted the economy remained "remarkably robust".

The OBR forecast growth of 1.2% this year, 1.4% next year and 1.6% in the following three years.

The Chancellor talked up a "deal dividend" for the country's public finances if Parliament can back a Brexit agreement.

He said he would decide later this year how to share the proceeds from any such dividend, suggesting possible boosts to capital investment and funding for public services.

But Hammond added: "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.

"Higher unemployment, lower wages, higher prices in the shops. That is not what the British people voted for in June 2016."

Shadow chancellor John McDonnell said there was no Brexit dividend, only "Brexit bankruptcies".

He said: "Even today the Chancellor has tried to use the bribe of a 'double deal dividend' or threats of postponing the spending review to cajole MPs into voting for the government's deal."

The SNP's Westminster economy spokeswoman Kirsty Blackman said Brexit meant there was "no certainty about the future health of the UK's economy".

The Borderlands investment package is the latest in a series of city and region deals agreed between the Scottish and UK Governments.

It follows similar agreements in Glasgow, Edinburgh, Stirling, Aberdeen, Inverness and Highland and the most recent, the Tay cities deal covering Dundee, Perth and Kinross, Fife and Angus.

Specific projects and activities to be supported by the Borderlands funding are expected to be announced over the coming months, under a 'Heads of Terms' agreement.

In addition to that, funding of £79m was also allocated to the ARCHER2 supercomputer at Edinburgh University.

It will be five times faster than the current supercomputer generation and capable of carrying out 10 thousand trillion calculations per second.

Hammond quipped: "I am told that with the right algorithms it might even be able to come up with a solution to the backstop."