THE Scottish Government yesterday laid out its plans for a Medium Term Financial Strategy that has tackling child poverty and combating climate change as two of the key spending priorities for the coming years.

The strategy was published in the midst of a fierce exchange of words sparked by the Scottish Fiscal Commission’s (SFC) forecasts of reductions in budgets which they said could mean public spending cuts or increased taxes.

Finance Secretary Derek Mackay attacked the UK Government’s continuing austerity policy saying: “Austerity is a choice – and not one of Scotland’s making. Following a £2 billion reduction in Scotland’s block grant, the Scottish Government is doing all we can to stimulate the economy, protect public services and provide people and businesses with as much certainty as possible.

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“Irrespective of the lack of clarity from the UK Government on its spending review, we value sustainable public finances and plan to undertake a review of resource spending beyond 2020-21.

“While we recognise that we will not be able to do all that we want to do – or all that others will want us to do – this strategy sets out how we will prioritise future resource spending on areas that will have the biggest impact.

“In the absence of firm UK commitments, the Scottish Government cannot yet quantify levels of future funding and the impact this will have on the Scottish Budget.”

According to the SFC, the Scottish Government is facing a possible funding gap of more than £1bn in its budget for the next three years.

The Tories said the data on income tax reconciliations was a “devastating blow” to the country’s finances, which could lead to either tax rises or spending cuts Mackay responded: “Despite Scotland’s strong economy and labour market, the Scottish Fiscal Commission has reduced its growth forecasts for 2019 and 2020 as a direct result of continuing Brexit uncertainty.”