FAI - The Fraser of
Allander Institute held a post-Autumn Statement briefing on Friday at the
University of Strathclyde.
The presentations – from Director, Graeme Roy and Head of
Fiscal Analysis, David Eiser – outlined how the downward revision in growth
forecasts following the UK’s decision to leave the EU was impacting upon the
outlook for the public finances.
The analysis concludes that the Scottish Budget will be
broadly flat in real terms between 2016-17 and 2017-18 (indeed, it will increase
marginally) however, overall, the Scottish Government’s resource budget will
fall by over 3% in real terms up to 2020-21.
This forecast is similar to that set out by George Osborne
back in March, suggesting that the new Chancellor will continue with his
predecessors plan to constrain public spending as he looks to tackle a
weakening UK fiscal position and uncertain economic outlook.
Given the Scottish Government’s existing spending
commitments in key areas such as health and childcare, this implies a real
terms cut in unprotected portfolios of between 10-14% (with the range depending
upon how well Scottish tax revenues perform relative to equivalent revenues in
the UK).
In contrast to the outlook for the resource budget, the
Scottish Government’s capital budget will benefit from an £800 million boost to
capital investment over the period to 2020-21. Coupled with the power to now
borrow up to £450 million per year, this implies a significant increase in the
overall amount the Scottish Government has available to spend on new roads,
hospitals and schools.
Source: Fraser of Allander
Institute
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