Expert warning on budget future

Prof Bell delivered the warning to MSPs in a Holyrood report

Holyrood ministers can expect to have "much more stringent budgets" in the next few years, an expert has warned.

David Bell, professor of economics at the University of Stirling, said the next financial year could be a "turning point" in Scotland.

He forecast the issue would see an environment as tough as any experienced during the 1970s or 1980s.

Prof Bell, an advisor to Holyrood's Finance Committee, issued the warning in a report to MSPs.

He also cautioned that the "grim public spending outlook" could lead to major shake-ups in the public sector, with up to an 8% budget cut.

In his report Prof Bell argued that the "massive increase in public debt resulting from the recession" could restrict public spending in the UK and Scotland for the "foreseeable future".

'Significant falls'

He said: "Since the 2009-10 budget was published, the outlook for the Scottish, UK and world economies has changed dramatically for the worse."

This will have severe consequences for public spending in Scotland for the foreseeable future, he said.

"Thus, though the 2010-11 Draft Budget is tight in relation to budgets earlier in this decade, subsequent budgets will be much more austere."

Prof Bell went on to state that tough financial times meant both the Holyrood and Westminster governments would have to "take a strategic view of how to manage public services with fewer resources in the next few years".

He added this could mean identifying services which the public sector can no longer afford to provide, as well as services for which will have to be charged for in the future.

Prof Bell pointed out that Scotland had enjoyed "substantial real increases in public expenditure" since the beginning of this decade.

However he went on: "These are now coming to an end. The outlook for the next few years is for significant falls in public spending in the UK as a whole, which will inevitably impact on the Scottish budget."