John Swinney warns Tory cuts could jeopardise Scotland's recovery

Published on Thursday 25 February 2010 21:45

FINANCE secretary John Swinney has warned that an incoming Conservative government must hold back from immediate cuts to the Scottish budget, saying it could plunge the economy north of the Border back into recession.

Mr Swinney told a conference of council chiefs yesterday that if cuts were imposed this coming financial year on Scotland it would "jeopardise" the recovery.

It comes after shadow chancellor George Osborne warned on Wednesday that work to reduce Britain's deficit would have to begin immediately.

Mr Swinney was speaking to council leaders after they issued a new paper, reported in The Scotsman yesterday, which warned that the public may have to start paying for services that are currently free as the cuts hit.

Savings of up to 25 per cent over the next few years may be required in Scotland's 32 councils. The Society of Local Authority Chief Executives (Solace) said the public might have "to do more for themselves" as budgets are cut.

Mr Swinney told the council bosses yesterday that funding would have been 174 million higher this year had it not been for the reduction in his 2010-11 budget. He said that if the budget was further cut, it would have severe consequences.

In a speech later in the evening, Mr Swinney went on to warn that if funding was further reduced, the consequences would be dire.

He said: "There is a significant risk that the premature withdrawal of fiscal stimulus measures may result in a 'double-dip' recession. The head of the International Monetary Fund has cautioned that reducing public sector support before private sector demand has sufficiently recovered could result in economies falling back into recession.

"That's why we have called on further targeted stimulus from the UK government, and in particularly for consent to bring forward further capital expenditure into 2010-11."