DEREK Mackay unveiled a package of measures to boost the economy north of the Border after warnings it faced a slower rate of growth over the next five years than the UK’s overall.
The Finance Secretary said the moves — which included £4 billion for infrastructure projects next year — would increase innovation and lead to a productivity rise.
To coincide with the draft Budget, the independent Scottish Fiscal Commission published its economic forecasts, predicting Scottish GDP would be 0.7 per cent in 2017 and 2018, 0.9 per cent in 2018, 0.6 per cent in 2020, 0.9 per cent in 2021 and 1.1 per cent in 2022 — lower than the modest rates for the whole of the UK.
The infrastructure funding includes £756 million towards investment of more than £3 billion by 2021 to deliver 50,000 affordable homes, which he said would create 14,000 jobs, a £600 million superfast broadband programme for the next four years and a £60 million low carbon innovation fund to deliver green infrastructure solutions including for electric vehicles.
He also announced £1.2 billion of transport plans, including for road projects and further electrification of the rail network.
Other measures were £340 million to provide initial capital for the Scottish National Investment Bank and £18 million for the National Manufacturing Institute in Glasgow.
“This Budget backs Scotland’s businesses to deliver the growth, innovation and new employment opportunities that Scotland’s economy needs to thrive in the 21st century,”said Mackay.
“Our £4 billion commitment to new infrastructure investment next year will support 50,000 new homes, new roads and railways, electric vehicles and the delivery of 100 per cent superfast broadband to every corner of Scotland.”
The SFC estimated the taxes now devolved to Scotland would raise almost £16bn in the next financial year. However, its report said the economic outlook impacted on forecasts of income tax revenue, with the prediction for 2018-19 being revised down from £12.3bn to £12.1bn.
Professor Graeme Roy, Director of the Fraser of Allander Institute, said: “While much of the political reaction will no doubt focus on Mr Mackay’s tax announcement, arguably the big story of the budget was the forecasts for growth – or lack of it – from the Scottish Fiscal Commission. The independent body predict that growth in Scotland will remain below 1 per cent to 2021, well below Scotland’s average growth rate since the early 1960s.
“ Despite this weak outlook for growth in the economy, the SFC’s forecasts for tax revenue growth are more optimistic enabling Mackay to offset a reduction in the resource block grant from Westminster through a targeted income rise focussed on higher earners.”
Nicola Barclay, chief executive of industry body Homes for Scotland, said:”With home building in Scotland supporting over 60,000 jobs and contributing billions each year to the economy, we are pleased to see the Scottish Government confirming its ambition for the housing of all types our country needs.”
She added the additional funding for skills bodies, colleges and universities that will help to plug the skills gap, is also welcome.
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