By David Scott
27 April 2010
Public spending in Scotland might not return to pre-recession levels for another 15 years, the chief economic adviser to the Holyrood government has warned.
In an April 26 report examining the implications of the UK’s finances for Scotland, Andrew Goudie estimated that Scottish expenditure could fall by £25bn to £35bn in real terms by 2024/25.
His analysis, carried out on behalf of the Scottish Government for an independent review it has set up to examine the Scottish budget, provided an ‘initial outlook’ for spending in the medium to long term.
He pointed out that the UK government has yet to provide detailed information for the composition of spending across the UK, including for Scotland, beyond 2010/11.
But he emphasised that it is already clear that public spending will be under considerable pressure over the next few years and said that forward planning was ‘vitally important’.
Goudie suggested that ‘Scottish Government spending may experience five consecutive years of real-term cuts’ and he said it could take a further two years ‘before growth returns to trend’.
The report noted that average reductions of around 3% a year in real terms are likely between 2011/12 and 2014/15.
By 2014/15 the part of the Scottish budget controlled by the Scottish Government –the Departmental Expenditure Limit – could be between £3.5bn and £4bn lower in real terms than in 2009/10.
Goudie adds: ‘It will take a period of sustained adjustment lasting up to 12–15 years before 2009/10 levels of expenditure are reached once again.
‘Over this period, Scottish expenditure could cumulatively forgo between £25bn and £35bn in real terms compared to a situation whereby in 2009/10 peak levels of expenditure remained unchanged.
‘The upper end of this scale would be more likely if the UK economic recovery were to be slower than forecast in budget 2010.’
First Minister Alex Salmond said that when figures of the scale suggested had been talked about in the past there had been an atmosphere of denial as if these had been ‘made up’.
Commenting on Goudie’s analysis, he added: ‘This is not something that’s made up. It’s a projection based on last month’s UK Budget and likely assumptions on where it will take us in the future.’
Salmond believed the gap could be closed but claimed this would require ‘major financial and constitutional changes’.
27 April 2010
Public spending in Scotland might not return to pre-recession levels for another 15 years, the chief economic adviser to the Holyrood government has warned.
In an April 26 report examining the implications of the UK’s finances for Scotland, Andrew Goudie estimated that Scottish expenditure could fall by £25bn to £35bn in real terms by 2024/25.
His analysis, carried out on behalf of the Scottish Government for an independent review it has set up to examine the Scottish budget, provided an ‘initial outlook’ for spending in the medium to long term.
He pointed out that the UK government has yet to provide detailed information for the composition of spending across the UK, including for Scotland, beyond 2010/11.
But he emphasised that it is already clear that public spending will be under considerable pressure over the next few years and said that forward planning was ‘vitally important’.
Goudie suggested that ‘Scottish Government spending may experience five consecutive years of real-term cuts’ and he said it could take a further two years ‘before growth returns to trend’.
The report noted that average reductions of around 3% a year in real terms are likely between 2011/12 and 2014/15.
By 2014/15 the part of the Scottish budget controlled by the Scottish Government –the Departmental Expenditure Limit – could be between £3.5bn and £4bn lower in real terms than in 2009/10.
Goudie adds: ‘It will take a period of sustained adjustment lasting up to 12–15 years before 2009/10 levels of expenditure are reached once again.
‘Over this period, Scottish expenditure could cumulatively forgo between £25bn and £35bn in real terms compared to a situation whereby in 2009/10 peak levels of expenditure remained unchanged.
‘The upper end of this scale would be more likely if the UK economic recovery were to be slower than forecast in budget 2010.’
First Minister Alex Salmond said that when figures of the scale suggested had been talked about in the past there had been an atmosphere of denial as if these had been ‘made up’.
Commenting on Goudie’s analysis, he added: ‘This is not something that’s made up. It’s a projection based on last month’s UK Budget and likely assumptions on where it will take us in the future.’
Salmond believed the gap could be closed but claimed this would require ‘major financial and constitutional changes’.
