GEORGE Osborne yesterday warned of a new round of austerity as he prepares to deliver his eighth Budget as it emerged the UK faces a £18 billion black hole in its finances.

The Conservative Chancellor sought to blame “uncertainty” in the global economy and said his Government would need to cut public spending by a further 0.5 per cent by 2020. “My message in this Budget is that the world is a more uncertain place than at any time since the financial crisis and we need to act now so we don’t pay later,” he told BBC’s Andrew Marr Show.

“That’s why I need to find additional savings equivalent to 50p in every £100 the Government spends by the end of the decade because we have got to live within our means to stay secure and that’s the way we make Britain fit for the future.”

Asked about claims the Government is facing an £18bn black hole in its finances, he replied: “£18bn is the sum of money that has been revised off our nominal GDP. In other words, that’s a number out there last year because inflation was lower. It’s a real number in the sense that all around the world every Western country, and indeed in big emerging countries like China, Brazil, Russia, people are looking at economic prospects and thinking they are not as rosy as they were just a few months ago.”

While Osborne was speaking of the necessity of further cuts, in a separate BBC interview yesterday Nicola Sturgeon dismissed as “ridiculous” claims the SNP would have had to implement an austerity agenda to tackle Scotland’s £15bn deficit if the country had become independent.

“That’s ridiculous. Countries the world over have deficits and deal with those deficits. We would also have been taking on the greater powers to grow our economy, particularly our onshore economy,” she told Andrew Neil on the BBC’s Sunday Politics.

Neil also challenged the First Minister on whether Scotland has the highest deficit in the European Union, with the journalist also claiming an independent Scotland would not be allowed to join the EU because of this. The SNP leader said: “Countries suffer deficits but what we would be doing is building on the underlying fundamental strengths of the Scottish economy.

“If you look at the last 10 years our fiscal position has been broadly similar to the rest of the UK, some years it has been much better than the rest of the UK’s, our onshore revenues are growing at a faster rate than the fall in offshore revenues.

“We’ve got higher employment than the UK right now, faster productivity growth, so our economy is fundamentally strong and that would have been a very good basis on which to become an independent country.”

Ahead of Wednesday’s Budget, Scotland’s Deputy First Minister and Finance Secretary John Swinney wrote to Osborne warning him that his austerity agenda had led to the UK’s economy shrinking with an estimated five per cent fall in GDP.

Swinney highlighted an independent study by Oxford University professor of economic policy, Simon Wren-Lewis, which found the Westminster Government’s fiscal consolidation programme, and the subsequent delayed recovery, may have cost the country £100bn. Professor Wren-Lewis has subsequently reported that, even following the upward revision to GDP, the UK’s growth performance has been poor.

Swinney has written to the Chancellor highlighting the research and calling on him to end the “damaging and needlessly restrictive” adherence to his fiscal rules and reminding Osborne of the Scottish Government’s alternative to austerity, which would balance the current budget and release around £150bn for investment.

On Marr yesterday Osborne also defended the £130 million tax sweetheart deal Google reached with HMRC, which was criticised by MPs for being “disproportionately small’’.

“I was faced with a situation when I became Chancellor where we were not raising any money from this company. We are raising money from Google and indeed, from Facebook. I think that is a success.”

As Osborne put the last touches to his Budget, “noisy” filming took place outside the Treasury by the Top Gear team and he tweeted host Chris Evans to “keep it down”.

The National View: George Osborne cannot keep ignoring the failures of his austerity programme