Chancellor Philip Hammond has said he will prioritise spending on new homes and transport rather than following his predecessor George Osborne's aim to balance the books by 2020.
He told the Conservative conference the deficit was still too large and would need to be tackled "in due course".
But he said the Brexit vote may cause "turbulence" and business confidence would be on a "bit of a rollercoaster". He said that it was "common sense" to invest to support growth and jobs.
In his Tory party conference speech, Mr Hammond said Mr Osborne's deficit reduction policies "were the right ones for that time" but that times had changed since the vote to leave the EU.
"When times change, we must change with them," he said. "So we will no longer target a surplus at the end of this Parliament. But make no mistake the task of fiscal consolidation must continue.
"The British people elected us on a promise to restore fiscal discipline. And that is exactly what we are going to do. But we will do it in a pragmatic way that reflects the new circumstances we face."
While the markets had "calmed" since the Brexit vote, he said it had caused uncertainty for business and the government had a duty to act to protect the economy.
Mr Hammond said the government would use "all the tools at its disposal" to increase the amount of new housing stock "because making housing more affordable will be a vital part of building a country that works for everyone".
