The Scottish Budget 2020/21 was published and agreed before Covid-19 was perceived as posing a significant health risk to the UK. This post examines how the policy response to Covid-19 will affect the size of the Scottish budget, the outlook for devolved revenues, and the financial risks the budget is exposed to. It also considers longer-term implications for the devolved fiscal framework.
In what feels like a different age, but was in fact earlier this year, the Scottish Government had expressed concern over the uncertain environment in which it had to prepare and publish its budget plans for 2020/21. Linked to this was a concern that parliament might scrutinise draft spending plans that were subsequently subject to substantial change.
These risks had nothing to do with a perceived threat of Covid-19 (the budget published on 6 February makes not a single reference to coronavirus or covid-19), but reflected the necessity to publish Scottish tax and spending plans a month before the UK budget.
As it happens the outlook for the 2020/21 budget has turned out to be far more uncertain that anyone could have anticipated, not because of surprise fiscal announcements from a buoyant new Westminster government, but from the necessity to shutdown large swathes of the economy to mitigate the impacts of Covid-19, and the resultant policy response.Continue reading