Scotland may need to raise taxes or issue cuts, according to think-tank

An urgent discussion on whether to cut spending or raise taxes is required ahead of the Scottish budget, according to a leading economic think-tank.

The proposal was made by the Fraser of Allander Institute in its Scotland’s Budget 2018 document, which warned austerity is “far from over” and said uplift as a result of Philip Hammond’s promise of £950 million for Scotland by 2020-21 would be offset by weak income tax forecasts north of the Border.

The report said the Scottish budget for 2019-20 will be similar to the previous year, but will still be lower than that for 2010.

It also said that further tweaks to income tax are possible, but the government will “need to consider a wider range of options” to raise revenue. Otherwise ministers would have to take a more strategic look at areas of the public sector where cutbacks will have to be made, “no matter how politically challenging”.