ONE of Nicola Sturgeon's leading economic advisers has acknowledged that devo max would plunge Scotland deeper into the red this year, as the SNP and Labour continued to clash over the economy.

Businessman Jim McColl, the head of Clyde Blowers Capital, said full fiscal autonomy, the Nationalists' key economic election demand, could be phased in by 2020.

His comments followed a warning by the respected Institute for Fiscal Studies think tank that the Scottish Government would face a £7.6billion hole in its finances in the current financial year if it had to rely solely on taxes raised in Scotland to meet its spending commitments.

Meanwhile Ed Balls, Labour's shadow chancellor, sought to underline the differences between his party's economic plans and the Conservatives'.

He used a major campaign speech in Glasgow to rebut SNP claims that Labour had signed up to the same programme of austerity measures put forward by George Osborne.

Mr McColl, a prominent Yes vote supporter and a member of Ms Sturgeon's hand-picked Council of Economic Advisers, has backed full fiscal autonomy since last year's referendum, which he said had settled the question of independence.

But in an interview with BBC Scotland he accepted the Scottish Government would face a cash shortfall if it were introduced immediately and said ministers would need to increase borrowing to maintain spending.

He said: "There would be a gap if you were allocating all these revenues. Yes, there would be.

"There has to be a change over a period, though. And that's where you also have borrowing capacity."

Suggesting a transfer of powers by 2020, he added: "It takes time to do the transition and you would have to have some sort of transition between the Barnett formula dropping off and the new way of working coming in."

Finance Secretary John Swinney stressed Scotland would not become fiscally autonomous immediately, citing the seven year gap between publishing plans to hand Holyrood partial control over income tax and the power coming into force.

The IFS analysis was based on the independent Office for Budget Responsibility's latest oil forecasts, which predicted revenues of just £3.5billion between now and 2019/2020, down £9.6billion on previous estimates as a result of low prices and tax breaks announced in last month's Budget.

Mr McColl said he expected oil prices to recover.

Labour and the Conservatives launched a fresh attack on the SNP's plan during a Holyrood debate.

Labour finance spokeswoman Jackie Baillie warned it would "hurt the people of Scotland and destroy our NHS, our schools and our pensions".

Speaking afterwards, Scots Tory finance spokesman Gavin Brown said: "All the figures by independent experts show there will be a lot of pain over the next five years if we adopt full fiscal autonomy.

"We now have one of the Scottish Government's own economic advisers effectively making the same point."

In Glasgow, shadow chancellor Mr Balls also dismissed devo max as he claimed only a Labour government would end Conservative-led spending cuts.

He promised new investment in the NHS, education and jobs immediately after the General Election.

Addressing supporters at the city's Royal Concert Hall he said the Tories were planning "extreme" and ideologically-driven spending cuts beyond what was necessary to balance the books.

Pledging £800million extra spending for Scotland in the current financial year, as a result of tax rises, he said: "Things will get better this year because of the changes we are setting out. They won't get better under either Tory or SNP plans."

Mr Swinney again claimed Labour had backed £30billion of cuts planned by the Conservatives, a charge rejected by Labour.

He said: "Ed Balls' daytrip to Scotland has fallen completely flat as his pretence of being anti-austerity fell apart at the first sign of scrutiny.

"People won't forget the way Mr Balls and his party trooped through the lobbies with the Tories to vote for another £30 billion in cuts - and how he said he'd change absolutely nothing in George Osborne's latest budget, even describing deviating from Tory spending plans in 2015/16 as irresponsible."