SNP warn budget will lead country back into recession

• Stewart Hosie

Party treasury spokesman Stewart Hosie issued the warning as Mr Darling said the next spending period could be "as tough" as the Thatcher period of the 1980s.

The Nationalist MP said Budget papers confirmed plans to cut 57 billion from UK spending in 2013-14.

He told BBC Radio Scotland's Good Morning Scotland programme: "That will almost certainly tip the country back into recession and make tackling the deficit and the debt more difficult."

The SNP has claimed spending in Scotland will be cut by almost three times as much as the UK as a whole under the new Budget.

The party said its calculations suggested the overall Scottish budget faced a real-terms cut of 1.3% next year, compared to 0.5% for the UK.

Mr Hosie said the Scottish budget was "600 million less than was announced in the Pre Budget Report in 2008".

He added: "This is where the real difficulty has come."

The Nationalists have already criticised the Chancellor for failing to deliver a boost for the struggling economy through accelerated capital spending – which they claim could have supported 4,000 jobs in Scotland.

But the UK Government pointed to 82 million of extra cash the Scottish Government will receive for 2010-11 as a result of spending decisions south of the border.

The SNP argue, however, that spending totalling 350 million needs to be accelerated to support the economy and the additional cash is less than a quarter of this.

Mr Hosie argued: "The best way to tackle the deficit in the medium to long term is to have growth in the economy. The one thing which is absolutely certain is that we're not going to be able to tackle the deficit or the debt at all if we dip back into recession.

"To cut now, to cut the budgets now before we have a sustained recovery, would just be very foolish indeed and that's exactly the line the Labour Party want to go down."

Mr Darling told the same programme that the public finances were improving, though he added: "We're by no means out of the woods yet."

The current UK spending programme runs until the end of March next year and when asked if the next spending review period would be as difficult as it was in the 1980s under Margaret Thatcher, the Chancellor said: "I think it will be as tough."

But he added: "It can be done. It does mean you're going to have to take some difficult decisions but I think you can do that at the same time as making sure things like the NHS, schools can be protected.

"I think people understand there is going to be quite a reduction in public expenditure, cuts in some programmes, simply because we've got to get the borrowing down, the high borrowing caused by the damage that was done to every economy in the world, ours included, by this recession."

The Chancellor's budget drew up the battlelines for the general election, expected on May 6, by squeezing the better off to fund help to new homebuyers, the elderly and the young unemployed.

Its centrepiece was a two-year stamp duty holiday for first-time home-buyers on properties up to 250,000, paid for by a new permanent 5% rate on homes over 1 million.

Mr Darling argued: "We believe that we can make a difference to the economy, we can make a difference by helping businesses, create the right economic atmosphere if you like, to make sure people get the jobs and growth in the future.

"We need to continue supporting our economy until we've got recovery in place."