The next Scottish Government will inherit a growing fiscal challenge, with the official forecasting body warning of a near £5billion shortfall by the end of the decade.
Graeme Roy, chair of the independent Scottish Fiscal Commission, said day-to-day spending could be £2.6billion short, while capital spending is projected to exceed available funding by £2.1billion.
“The government will not have sufficient funding to meet its spending commitments,” he warned.
Daily Business reports that while higher revenues have provided a £406million boost to next year’s budget, that position will soon reverse, with a loss of £851million expected in 2027-28.
Prof Roy said the next administration could face a “big hit in the first year” after the May election.
Ministers have already accepted that the public sector workforce must shrink by 0.5% annually for the next five years – a reduction of around 12,000 jobs.
Prof Roy described this as “quite a departure of trend” in Scotland’s recent approach to staffing levels.
Public sector pay is also likely to come under pressure, with recent awards exceeding the Scottish Government’s 3% policy limit.