In its Fiscal Update published today, the Scottish Fiscal Commission has said that the Scottish Spending Review due this December provides an opportunity for the Scottish Government and the Scottish Parliament to address both the immediate budget pressures and, crucially, long‑term fiscal sustainability challenges.
The Scottish Government’s Medium-term Financial Strategy (MTFS) in June set out the scale of the challenge it faces in balancing its budget. Based on current trends, the Scottish Government expects spending to exceed available funding for day-to-day spending by £2.6 billion by 2029‑30 and for capital spending by £2.1 billion. This is equal to 4 per cent of planned day-to-day spending in 2029‑30, and 23 per cent of capital spending.
Just as importantly, the Scottish Budget also faces long-term pressures beyond the five years covered by the MTFS. For example, an ageing population is expected to increase demand for health‑related spending and meeting the new climate change targets set by the Scottish Government will require substantial investment. The Scottish Spending Review needs to be set with a view to improving the long‑run sustainability of the public finances.
Addressing the fiscal challenges facing Scotland will be the responsibility of the Scottish Government and Scottish Parliament elected in May 2026.
The Commission’s Chair, Professor Graeme Roy, said:
“The Scottish Spending Review in December will determine the trajectory of public spending over the next Parliamentary term and it must provide a meaningful basis for informed debate on the public finances during and after the election.
“Closing the fiscal gap will require all parties in this Parliament and the next to work together to address the fiscal challenges and any debate around new spending plans, changes to social security policy or tax changes needs to consider the broader public finances.”
ENDS