Scottish Government faces economic ‘challenges’, warns watchdog

The Scottish Government will face “challenges” when trying to balance its books in the wake of the coronavirus pandemic, an independent watchdog has warned.

Buchanan Street stands empty on April 13, with Glasgow's usually busy shopping district closed due to lockdown. Picture: Craig Williamson

The Scottish Fiscal Commission today published an update on the 2020 Holyrood budget following the unprecdented spending commitments subequently announced by ministers north and south of the Border.

The briefing paper predicted that devolved tax revenues would be “heavily affected” as the lockdown continues to impact on businesses.

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It added that while there ill be no immediate impact on the 2020-21 budget, any shortfall would have to be fixed by a “reconciliation” to the budget of 2023-24.

The commission calculated the combined effect of the Scottish Government’s Budget deal and the UK Budget on March 11 was an increase in spending of £247 million in 2020-21.

In addition the Scottish Government is currently expected to receive £3.5 billion from the UK Government, representing its share of the significant increase in public spending in the UK aimed at tackling the COVID-19 crisis.

Dame Susan Rice, who chairs the commission, said: “In the light of the changes since our last forecast, today we are providing an updated perspective on the current Scottish Budget position.

“The Scottish Government is required to broadly balance its budget and has limited scope for borrowing and using its reserves. Given the uncertainties about the level of funding and the spending required to respond to the crisis this may present some challenges.”

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