Image source, SFC

Read Scotland's Economic and Fiscal Forecasts May 2019 here. , external

Scottish Green co-convener Patrick Harvie asks about a potential shift back towards high carbon capital projects in the pipeline, as set out by SPICe.

Mr Mackay says the SPICe report is six months old and the climate emergency means the Scottish government is re-calibrating plans.

Scottish Lib Dem leader Willie Rennie says the lower income tax forecasts are still expected to have an impact on the next two budgets.

The finance secretary says the government may have to look at borrowing and expenditure, but he says the OBR's forecast has changed in terms of the block grant adjustment.

The out-turn figures in July will be critical as these will help in the next forecast which are to set the budget, he adds.

Labour MSP James Kelly says the "bleak figures", including there being £188m less for 2019-20, are concerning.

Mr Kelly asks what action will be taken to address the gap in public finances and the "gaping hole" in public services.

We will continue to invest in public services in Scotland, replies Mr Mackay.

If we were able to avert Brexit and end austerity, there would be a "massive windfall" for us, he claims.

Tory MSP Murdo Fraser says a "dismal picture" has been painted with growth in Scotland to lag behind the rest of the UK.

What will Mr Mackay do to address this, he asks.

Mr Fraser also notes a shortfall in predicted income tax receipts and he asks how this gap will be filled.

The finance secretary says on GDP, Scotland is outperforming the rest of the UK.

The reason for subdued expected growth in Scotland is Brexit according to the Scottish Fiscal Commission, insists Mr Mackay.

He also highlights the impact of slower population growth expected in Scotland, which is hindered by migration.

Regarding income tax receipts, he says the SFC has shown increases relative to the December forecast.

Douglas Fraser
Scotland business & economy editor

Image source, Getty Images

A disorderly Brexit risks a deep recession in Scotland, according to researchers.

The Fraser of Allander Institute (FAI), part of the University of Strathclyde, predicts a loss of more than one £1 in every £20 of output from the economy.

It suggests the fall from peak to trough in the economy could be around 5.5% of total output, contracting for two whole years.

This is in line with forecasts made by the Bank of England for the UK economy.

Read more here.

The finance secretary says the forecasts show a strong Scottish economy with unemployment to remain at record lows and wages to rise.

But forecasts for the block grant adjustment deducted from the budget have gone up, he says.

The 2020-21 budget will depend on the next forecasts, he adds.

We will borrow between £250-450m to ensure investment in infrastructure increases year on year, Mr Mackay states.

He says the Scottish government remains committed to bringing forward a three-year settlement for local government from 2021.

Indicative budgets are to be published in December 2019 if there is sufficient clarity from the UK government, he adds.

The Scottish government is committed to using its powers to stimulate the economy and protect public services, says the finance secretary.

He says budget decisions taken in December mean Scotland has more to spend than it would have if it had followed the lead of the UK government on income tax.

Mr Mackay says the aim is to have 100% of Scotland covered by regional growth deals.

He adds that investment in infrastructure will be £1.56bn higher in 2025-26 than currently.

He also confirms the intention to adopt a mutual investment model to support infrastructure spending.

Image source, Getty Images

Official figures from the Scottish government show the economy grew by 1.3% in 2018.

Growth is close to the UK figure of 1.4%.

The latest publication, external from Scotland's chief statistician confirms the original estimate of 0.3% growth in the final quarter, but revises downwards the overall 2018 figure from 1.4%.

The report indicates the services sector and construction continued to grow, but production fell by 0.8%

Read more.

Derek Mackay says Brexit, austerity and a "hostile" approach to immigration continue to set the context for the strategy.

"Austerity is a choice and not one of Scotland's making", he says, adding it is counter-productive.

Uncertainty is leading to subdued growth and leaving the EU will only compound that, Mr Mackay says.

He confirms the Scottish Fiscal Commission has downgraded its forecast due to this uncertainty, with growth of 0.8% expected for 2019.

Image source, PA

Finance Secretary Derek Mackay is about to deliver his second ever medium term financial strategy (MTFS).

The MTFS is designed to improve parliamentary scrutiny of Scottish government budgets by providing information on the sustainability of devolved public finances.

The strategy will:

• use revenue and expenditure forecasts to measure the effect on public finances
• set out broad finance plans over the next five years
• outline policies and principles for the use, management and control of financial powers
• undertake scenario planning based on economic forecasts

Social Security Secretary Shirley-Anne Somerville says agency agreements will be put in place ahead of the transfer on 1 April 2020 where appropriate.

They are a cost-effective way of ensuring benefits continue to be delivered while the new systems are established, she adds.

The details of the agency agreement will be analysed by the parliament as they are published, she says.

Image source, Getty Images

There is no clear understanding of what is needed to deliver welfare payments to Scotland's expected 1.4 million claimants, Audit Scotland has said.

The warning from the spending watchdog comes as the Scottish government prepares to take over control of 11 benefits from the UK government.

So far almost £90m has been spent on delivering the new benefits system.

However, Audit Scotland said it was still unclear what the overall cost would be.

In its report, external, the spending watchdog said that while the delivery of the first two benefits to be taken on by Social Security Scotland had gone well, the real challenge lay ahead.

Ministers have previously denied their timetable for implementing the new benefits' rollout was unrealistic.

Read more here.