The introduction of driverless vehicles will mean more than a million people who drive for a living will have to be retrained, Philip Hammond has said.
The Chancellor said the advent of the new technology will "transform the productivity" of the UK economy, but warned that for some people it could be “very challenging”.
It comes after he used yesterday's budget to reveal electric and driverless will get a £500million boost as he laid out plans for the future of Britain's roads.
As part of the measures, red tape will be slashed to allow tech firms to test driverless vehicles on public roads by 2021.
Speaking on BBC Radio 4's Today programme, Mr Hammond said: ""It will happen, I can promise you. "It is happening already... It is going to revolutionise our lives, it is going to revolutionise the way we work. And for some people this will be very challenging.”
"The challenge for us is making sure that the million-odd people in the UK who drive for a living, over the next 10, 20 years or so, as driverless vehicles come in, are able to retrain and reskill so they can take up the many, many new jobs that this economy will be throwing up."
The Chancellor wants fully driverless vehicles on the UK’s roads by 2021 but has admitted he had never been in one.
Mr Hammond’s praise for the technology came as Jeremy Clarkson claimed he was almost killed on two separate occasions during a single journey in a vehicle with an autonomous capability.
Addressing MPs yesterday in the Chamber, Mr Hammond quipped: "I know that Jeremy Clarkson doesn’t like them… sorry Jeremy but definitely not the first time you’ve been snubbed by Hammond and May."
The driverless technology industry is expected to be worth £900 billion globally by 2025 and is currently growing by 16 per cent a year.