Cuts will not see new Forth Road Bridge plan ditched

The Scottish Government said Chancellor George Osborne's spending review meant Scotland's overall budget would fall 1.3bn in cash terms next year compared to this year.

Mr Swinney said that included a 25 per cent cut in capital spending, slashing 800,000 off the amount available next year for investment in key projects.

He warned the capital cuts alone could cost some 12,000 jobs across Scotland.

Mr Swinney will set out his own spending plans within the next four weeks, and he has already insisted that the new bridge will go ahead.

He said: "We have identified projects that are of a strategic nature that must go ahead.

"The capital budget will provide for the Forth Replacement Crossing to be taken forward and that's what the government will do."

Meanwhile, even bigger council cuts are looming for Edinburgh after the Chancellor announced an increase in health spending as part of his review.

NHS spending will rise 1.3 per cent south of the border and the Scottish Government has already pledged the increase will be passed on to the health budget in Scotland.

Senior SNP councillor Tom Buchanan said figures produced by officials suggested that ring-fencing health spending would increase the "black hole" in the city council budget from 92m over three years to 137m.

He said: "Trying to find 92m is hard enough and so far we have identified 16m savings which have gone through the council, but we are a long way short."

Edinburgh East Labour MP Sheila Gilmore said she feared the 7bn cuts in welfare announced by Mr Osborne could hit one in eight people in the Capital.

She said: "I support the idea of making work pay, so that people cannot be better off on benefits than in employment, but I fear that this Government will only achieve this by slashing benefits for those who rely on them."

"I worry the Chancellor will hit the living standards of the most vulnerable in our society."

Edinburgh Chamber of Commerce's chief executive. Ron Hewitt. broadly welcomed the spending review.

He said: "The Government has had to make some tough decisions in difficult circumstances, and seems to have got the balance just about right."