Scotland’s budget is set to fall by at least£3.35bn over the next three years, according to a report by the Centre for Public Policy in the Regions.

 

The study projects that Scotland’s budget will fall by more than 3 per cent in real terms annually for three years running.

 

The SNP seized on the report, co-written by economist and former Labour adviser John McLaren, as confirming its warnings over Westminster budget cuts.

 

SNP Treasury Spokesman Stewart Hosie MP said: "This report confirms the warnings the SNP and John Swinney have been making for some time.

 

"Scotland is set to feel the impact of London's spending squeeze and the Treasury's failure to accelerate capital this year will only exacerbate the effects.

 

"Scottish Labour's fiscal fantasy must come to an end. While the SNP Scottish Government takes responsible action to keep Scotland's finances in order Labour continue to demand more and more money for their pet projects."

 

The Scottish Government raised concerns over the implication of the figures, and criticised Chancellor Alastair Darling for refusing to allow it to accelerate capital spending. 

 

A Scottish Government spokesperson said:

 

“The squeeze on public spending in Scotland is likely to be unprecedented in severity and duration.  Although the full picture is far from clear, a considered estimated published in SPICe suggests that the Scottish Budget might face a potential reduction of £457m in relation to specific efficiency measures announced in the PBR and potentially an additional £800m reduction through a general Operational Efficiency Programme by 2012-13.

 

“Of course we are already taking steps to address these challenges through our simplification agenda and by driving forward a tough and ambitious efficiencies programme that exceeded its targets by some £300m last year.

 

“But there will still be difficult decisions and choices to be made. Again, we have begun that process through next year’s draft budget, which makes tough choices where necessary while protecting investment in frontline services and economic recovery, in the face of a substantial cut in the money available and the refusal of the Chancellor to allow us to bring forward further capital spending. That was absolutely the wrong decision, at a time when weak private sector demand makes it vital that the public sector maintains its support to the economy so that revenues increase.”