Difficult choices in a challenging period
Last week, I delivered the Emergency Budget Review to the Scottish Parliament.
I first announced this review in August, as it was crucial to ensure that we were doing everything to support the people of Scotland through the cost of living crisis, while maintaining a pathway to balance the budget.
At the time of this announcement, Scotland was facing a hugely bleak economic outlook.
A combination of the impacts of Brexit, the aftermath of the pandemic and the energy crisis fuelled by Russia’s illegal invasion of Ukraine had sent prices spiralling.
Regrettably, the situation has only worsened in the interim period as a result of UK government incompetence.
The UK government’s‘mini budget’sent shockwaves through the markets, driving up borrowing costs for government, businesses and households.
This disastrous package of unfunded and uncosted tax cuts for the rich has inflicted significant damage on households across the country and led to huge uncertainty for Scotland’s finances.
Moreover, the UK government’s scramble to correct course has only brought with it more problems.
As an example, the Scottish Government was told that we would receive an additional £660m funding through the Block Grant Adjustment.
Subsequent policy changes under the new chancellor, Jeremy Hunt, means that our funding will actually be cut by £230m. This is a swing of almost £900m in less than a month.
To make matters worse, it seems certain that the Tories will implement another period of brutal austerity in a desperate attempt to repair their disgraceful mismanagement of the UK economy.
Scotland knows only too well how damaging and heartless these policies are.
I cannot overstate the degree of challenge facing Scotland’s economy, nor the difficult of conducting this Emergency Budget Review.
In all of my time in government, I can honestly say that there has never been a period of greater pressure on the public finances.
Inflation means that our annual budget today is worth £1.7 billion less than when it was published in December 2021.
At the same time, demand for government support and intervention is understandably increasing, as the Scottish public face up to spiralling inflating, soaring energy bills and the cost of Brexit.
The great challenge the Scottish Government faces is that we have to balance the books.
We have very limited borrowing powers and we do not control all the necessary economic levers to raise money or provide relief. In short, we are far less equipped to tackle the cost of living crisis than if we were an independent country.
In my Emergency Budget Review, I set out how Scotland would balance its budget whilst prioritising funding to help families, to support businesses, to provide fair pay awards and to protect the delivery of public services.
Make no mistake, though – I have had to make some very difficult choices to allow us to achieve these goals.
The coming months are likely to prove very difficult.
This is an even more bitter pill to swallow as so much of what is being inflicted upon the people of Scotland is a result of the actions of a UK government that we did not vote for.
I offer my assurance that the Scottish Government will continue doing everything in its power to support people.