A failure to close the gap between spending and revenues, and then pay down the debt, will shackle our economy for many years to come.
The sustained spending restraint required will undoubtedly be tough, particularly as cost pressures and demands for better quality services rise.
This should put a premium on new thinking, and ought to be viewed as a positive opportunity to do things differently. It should also underpin the report of the Christie Commission on the future delivery of public services, due out tomorrow.
Public service reform is about much more than simply culling the number of public bodies, as alone this doesn't reflect the scale of the challenge confronting us. Instead, more fundamental reform is required.
Public authorities should continue to make the big decisions over policy, funding, and standards, but look to others – whether from the private or not-for-profit sectors – to provide services. There are few areas within the devolved realm where public bodies themselves must be the default provider.
Promoting competition and a diverse range of suppliers should be the cornerstone of Christie's recommendations, to ensure value for money and encourage innovation in service delivery. Firms should have a "right to bid" to deliver public services, to promote new ideas and ways of working, and to attract additional investment into our public services.
Existing legal and political barriers which prevent authorities commissioning the best provider – for example hospital catering and cleaning, GP services and prisons – should be rescinded.
Good examples of private providers working with public authorities in Scotland do exist, but must become much more commonplace. The debt challenge facing government can be overcome, but it will require spending discipline, economic growth, and real public service reform.
• David Lonsdale is Assistant Director, CBI Scotland