NICOLA Sturgeon has warned Scots to expect a tough Budget, as the government are forced to work with less money from Westminster and rising costs.

Speaking at the National Economic Forum in Edinburgh, the First Minister said not everybody would agree with everything in the budget when Derek Mackay delivers it this afternoon.

There was bad news for the government yesterday when the latest unemployment figures showed an increase of 8000 in the jobless figures.

However, the unemployment rate is still lower north of the Border than it is down south.

In a bid to boost growth, Sturgeon suggested there could be extra cash for infrastructure and research and development.

She told the forum: “Nobody will agree with everything in the Budget — that’s not how budgets, particularly tough budgets, work.

“But I do hope you will be able to see that the interests of businesses and the interests of growing the economy have been absolutely central at every stage in our thinking.”

Sturgeon said the Scottish Government’s block grant for “day to day expenditure” is decreasing, while the need for investment is growing.

“By setting clear ambitions, we believe we can encourage investment and innovation in technologies where we already have strengths, and for which there will be a global demand,”

The First Minister added. “The ability to help people to contribute to the economy is central to our thinking.

“We know that we need to ensure taxes are competitive. But we also need to invest in the infrastructure, the research and development, and the capacity for innovation that this country will need in the future.

“That’s the balance that we are looking to strike”.

She added: “The interests of businesses, and the importance of economic growth, have been central in every stage of our thinking and they will continue to be central as we implement the budget.”

It seems almost certain that Mackay will announce a rise in income tax, but on Tuesday, the Scottish Government’s chief economist issued a pre-Budget warning, which suggested the Finance Secretary may be more ca’ canny.

Dr Gary Gillespie’s said hiking the top rate of tax to 50p in the pound in Scotland while it remained at 45p in the rest of the UK, could actually lead to less money coming into the government’s coffers.

During a debate in parliament yesterday, the Tories pointed out that the SNP’s 2016 manifesto had committed them to not raising income taxes.

Ruth Davidson’s party claimed this meant 65 per cent of voters at the last Holyood election backed parties opposing tax increases.

Murdo Fraser, Scottish Tory shadow finance secretary said: “The wording in the SNP manifesto could not have been clearer. It states, and I quote directly: ‘We will freeze the basic rate of income tax throughout the next parliament to protect those on low and middle incomes’.”

He added: “In the Scottish Parliament election last year… ourselves and the SNP pledged no increase in the basic rate of tax. Between us, our two parties, the tax payers’ alliance of the Scottish Parliament, achieved some 65 per cent of the Regional List vote. So 65 per cent of Scots voted for parties opposing any increase in the basic rate of income tax.”

The Tory pointed to Fraser of Allander Institute suggesting growing the Scottish economy by just half a per cent more than the UK average would, over a decade, provide an extra £1 billion in tax revenue to spend.

“That is where the Scottish Government should be concentrating its efforts, not in increasing the tax burden on hard-working families,” he added.

Responding, Mackay said Fraser was “like an impatient child” for wanting to know what was in the budget a day early.

He told MSPs it was the Tories who were “the biggest threat to the economy in Scotland”.