The outlook for the Scottish budget in 2020 and beyond

The outlook for the Scottish budget in 2020/21 has changed substantially since it was published in March. Higher spending and lower revenues will largely be offset by increased grant from the UK Government. The pandemic also accentuates the scale of several fiscal risks that the Scottish budget was already exposed to, leading to calls for the Scottish Government to have access to additional fiscal flexibilities to manage these risks. The Covid-19 health crisis and its aftermath poses a range of substantial fiscal challenges for the Scottish budget in 2021/22 and beyond. But the outlook for the Scottish budget is extremely uncertain beyond 2020/21, creating challenges for the Scottish parties as they begin preparing their manifestos for next May’s Holyrood elections. This paper assesses the risks to the Scottish budget this year; appraises the scope for additional budget flexibilities to manage these risks; and considers the longer term outlook for the budget in the next parliament, both in terms of the key fiscal issues to be addressed and the likely level of resources available