The Scottish government will be able to borrow up to £300m more a year for three years and draw down strategic reserves after forecasts of a sharp contraction in output this quarter met the criteria for a “Scotland-specific economic shock”, finance secretary Kate Forbes announced on Thursday.
The disclosure of the first use of such powers since substantial control over income and other taxes was devolved to Scotland in 2016 came as Ms Forbes unveiled an annual Scottish government budget focused largely on tackling the coronavirus crisis.
The independent Scottish Fiscal Commission on Thursday forecast a 5 per cent contraction in economic activity in Scotland in the first three months of 2021, sufficiently below predictions for the UK from the Office for Budget Responsibility, the fiscal watchdog, to trigger the “economic shock” clause in the complicated framework governing fiscal relations between Westminster and Edinburgh.
In her budget speech, Ms Forbes…