Scotland could face a £1 billion spending black hole in the coming years, potentially necessitating tax hikes or further austerity.
The nation’s economic watchdog has warned that Finance Secretary Derek Mackay may have to increase taxes or implement austerity measures in his annual budget as a result of the country’s financial woes.
The Scottish Fiscal Commission’s fresh 2019/20 estimates revealed Scotland is facing an income tax shortfall amounting to £229 million next year. This ‘black hole’ increases to £608 million in 2021/22 and £188 million the year after.
Conservative finance spokesman Murdo Fraser said: “This is a devastating blow for Scotland’s finances totalling more than £1 billion.”
“For years, the SNP has been warned about the poor economic performance for which it is responsible and now we see the consequences of that.
“This is disastrous news for public services, as well as hardworking Scots who may be in line for even more of their payslip being seized by the SNP government."
However, Mr Mackay contends that Scotland’s slow GDP growth is due to Brexit and the fact the Scottish government has been putting cash into the Scottish reserve to manage volatility.