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UK spending plans mean the Scottish Government’s budget faces continued cuts in real terms until 2017, according to new updated analysis.

The findings make an overwhelming case for additional capital spending now to support recovery, and for independence and financial responsibility for Scotland to boost growth, said Finance Secretary John Swinney.

The latest Outlook for Scottish Expenditure, produced by Scottish Government economists, reflects changes to spending plans announced by the Chancellor in his Autumn Statement and updated forecasts for the UK economy and public finances by the Office for Budget Responsibility published in November.

The analysis takes into account the additional spending cuts now planned for beyond the current Spending Review period, the effects of the consequentials to the Scottish Budget announced in the Autumn Statement, and the impact of revised forecasts for inflation.

The Outlook finds that:

• the Scottish Government’s Departmental Expenditure Limit budget would fall in real terms by nearly 18 per cent over a seven year period
• this includes an extra two years of cuts beyond the current Spending Review period
• based upon these projections it could now be 2027-28 before Scottish spending returns to its 2009-10 level in real terms, two years later than forecast at the time of the Draft Scottish Budget
• the forecast cumulative real terms loss to the Scottish Budget over this period could be £51 billion, a third higher than the £39 billion forecast last autumn

Finance Secretary John Swinney will tomorrow attend a meeting of Finance Ministers in London and call again on the UK Government to get the economy moving now, with additional investment in infrastructure projects.

 Mr Swinney said:

"This latest analysis makes an overwhelming case for an injection of extra capital spending right now to support recovery – and for independence and financial responsibility so that we can deliver an alternative economic strategy to boost growth.

"It is further evidence that the UK Government’s austerity programme is deeply damaging to Scotland, and we now know that without independence and substantial new financial powers coming to Scotland, we face years of cuts from Westminster.

"The UK Government’s failure to achieve significant growth in the economy has seen the Chancellor extend his borrowing and cuts programme even further – and this new analysis is further evidence that the UK Government is funding the cost of failure, and that Scotland is paying the price.

"But, of course, it does not have to be like this – because for Scotland there is a real alternative. The independence referendum in Autumn 2014 will be an opportunity to ensure that the key economic decisions are taken in Scotland for Scotland, and that we can boost economic growth and thus government revenues.

"With responsibility for our own finances and our own vast natural resources, including the trillion pound asset base of North Sea oil and gas, we will be able to make choices in our own best interests. With independence, we would control the fiscal levers we need to suit our own economic circumstances, and maximise Scotland’s potential to secure new investment and jobs.

"The referendum will be a chance for Scotland to choose a new, better path. In the meantime, we are doing all we can with the powers we currently have to boost the economy and support jobs - and to get the economy moving again we need the UK Government to follow our ‘Plan MacB’ approach and increase capital investment, secure consumer confidence, and ensure that businesses have access to finance to create the conditions necessary for recovery.

"Scotland’s recession was both shorter and shallower than the UK as a whole, and in the face of Westminster cuts, we are tackling unemployment, creating and securing new jobs through inward investment, and investing in capital projects."