LUCKILY for George Osborne this week, as he stood up to explain how he was going to pay for a forced delay in his planned tax credit cuts, a pot of gold materialised.

However, crucially for low-income households, the Chancellor intends to press ahead with his £12 billion annual welfare savings, hitting those on low incomes hardest, sucking demand out of the economy and hampering the unbalanced recovery further.

It all seemed rosy in Osborne's garden as the Chancellor did not have to go to the end of the rainbow to find his pot of gold. Rather, the princely sum of £27 billion was provided by changes in the forecasts of the Office for Budget Responsibility, which was set up by Osborne back in 2010. Specifically, the independent OBR forecast tax revenues would be greater than thought and the costs of servicing the national debt would be lower.

Osborne was happy to embrace these new projections fully, thus seizing the cash with both hands, declaring: "The OBR expects tax receipts to be stronger. A sign that our economy is healthier than thought.”

Figures on Friday confirmed UK growth slowed from 0.7 per cent in the second quarter to a below-trend 0.5 per cent in the three months to September. And overseas trade proved a particular drag, in spite of Osborne’s March 2011 Budget vision of “a Britain carried aloft by the march of the makers”.

Yet Osborne, presenting his Autumn Statement and Spending Review this week, reiterated his by now familiar phrase: “Our long-term economic plan is working.”

He talked about how he was now able to “help on tax credits”. This “help” was delivered following an embarrassing House of Lords defeat on his planned £4.4 billion cut in annual tax credits.

But while Osborne might have been smiling and offering “help”, the pain will go on for the poorly-paid and unemployed.

The Sunday Herald has asked experts, including some of Scotland’s most prominent economists, to assess the impact of Osborne’s Autumn Statement and Spending Review. These experts give their views on crucial issues such as Osborne’s reliance on the new OBR forecasts, the impact of cuts in public spending and particularly welfare, the North Sea situation, and what it all means for Scotland.

David Bell, professor of economics at the University of Stirling

Last Wednesday, the Chancellor firmly set course for the land of budget surplus. He expects to get there by 2019-20. His passage has been assisted by an unexpected fair wind, courtesy of the OBR. Compared with last July, its November forecast suggests a £27 billion improvement in the public finances due to a stronger economy and falling costs of borrowing. This should smooth the path to the destination while also inflicting less pain on the long-suffering crew.

Could he have taken a different course? Certainly. The budget deficit is forecast at 3.9 per cent of GDP in 2015-16, substantially down from its unsustainable peak of 10.2 per cent in 2009-10. A plan to move to surplus by 2019-20 is more emblematic than essential.

As a share of GDP, which is the real measure of its affordability, the value of UK debt will fall from 82.5 per cent of GDP this year to 71.3 per cent by 2020-21. Balancing the budget more slowly would not have a substantial impact on this downward debt trajectory. Severe spending cuts may also weaken economic growth. Of course the critical question is how much more slowly? There is no easy answer: but at the moment this is not a big risk because the UK can still borrow very cheaply.

Even accepting the final destination, there are choices to be made along the way. These are the key decisions that allocate the pain. Amongst the most important was the decision to take £12bn out of the welfare budget. By 2019-20 it will account for 8 per cent of GDP, down from its current 9.3 per cent.

But even within the welfare budget, there is a great divide: benefit spending on pensioners will continue to rise, but support for those of working age and children will fall substantially. Spending on the state pension will increase from £89 billion this year to £101 billion in 2019-20: this will be slightly offset by a £0.6 billion reduction in pension credit.

A careful examination of the OBR forecasts shows that £5.6 billion of the £12 billion reduction in welfare spend will come from working age tax credits. How can this be when last week’s announcement seemed to drop the tax credit cuts announced in July? The pain is being introduced more gently and more subtly, but the end point is the same.

The main explanation is that tax credits will largely have disappeared by 2019-20, and be replaced by universal credit. The OBR clearly judges that this transition will leave many families worse off. The Chancellor must be praying that the new national living wage of £7.20 an hour will offset enough of the pain to prevent the crew abandoning ship.

Jeremy Peat is visiting professor at the University of Strathclyde’s International Public Policy Institute

In the weird old world of the public finances everything is relative. So the Chancellor’s Autumn Statement was relatively good for Scotland in that it was no way as bad as anticipated. Why not? Well a change in the Office for Budget Responsibility’s forecasts on tax revenue and the costs of servicing public debt yielded Osborne a £27billion windfall gain; and as a result he ducked out of his proposed tax credit reductions and cut public expenditure across a range of departments by markedly less than he himself had predicted.

So Scotland ‘gains’ by not suffering the major losses for lower income families which would have resulted from the tax credit cuts; and also because, given the story on UK public expenditure, the Block Grant received by the Scottish Government falls by less than expected. Indeed capital funding will actually rise over the next few years.

But in absolute terms times will be tougher next year than this, in that Swinney will have significantly less money in his budget for recurrent expenditure – the major component; and those welfare cuts which are going through will (according to IFS calculations) impact adversely on a quarter of a million Scottish working families.

Further the apprenticeship levy will hit major Scottish companies, another example of this Government’s efforts to transfer responsibilities and costs from central Government to a combination of local authorities and business.

Generally now is not a time to relax. In accepting in full the windfall gains from the OBR forecasts, the Chancellor is taking a gamble. If the forecast can change so much from spring to autumn it can readily change back again. What if tax revenues actually disappoint and/or borrowing costs exceed these new expectations? Then the Chancellor would be forced to either be even tougher in the future than he is at present projecting or to eat a large slice of humble pie and delay even further the date at which the deficit would be eliminated.

As both Chancellor and Prime Minister delighted in stressing on the day of the Autumn Statement, an independent Scotland would have faced major problems as a result of the massive fall off in tax revenues from oil and gas. But that is a hypothetical issue – and one to be saved for another day. The focus now should be on seeking means of enhancing competitiveness and productivity and fostering ambition across our private sector, despite Osborne’s efforts.

Ross Martin, chief executive of the Scottish Council for Development and Industry

The Scottish, and wider UK economy is in transition, from the short-termism which presaged the financial crash to taking on the characteristics of sustainable growth. We are moving from a period where our main opportunities were considered to be in handling financial capital and resources, to one where the largest challenge appearing over the horizon with every daily sunrise, is how best to manage the movement of human capital and a declining resource.

The Chancellor's Autumn Statement and the Comprehensive Spending Review, although littered with short term measures driven by the political cycle, must therefore be viewed against that longer term trend. It's implications should be seen, not only in terms of the short term impacts it may have on the Scottish economy, but on how it helps or hinders our transition to that future economy.

Another key determinant in any Scottish assessment of current policy pronouncements is the Fiscal Framework being constructed around the Scotland Act, a concept without an agreed architecture and a client represented by fully 97 per cent of the Scottish population, i.e. those who self registered to vote in the Referendum, to have their say, whether they then said Yes, No or Don't Know through abstention.

The decentralisation of the UK economy after 100 years of centralised mentality is beginning to witness a great cross fertilisation of ideas, in place of the simple and strong centripetal pull of London. We all recognise the power of infrastructure investment as being universally welcomed, but the hit on the public finances of the oil price drop may wipe out that gain and much more needs to be done to bring our Victorian infrastructure up to speed.

Although specific references to City Region Deals are welcome, if we are to tackle the key economic challenges of poor productivity, low levels of innovation and an anaemic performance on internationalisation, then we must see even higher and sustained levels of investment, both in soft and hard infrastructure, across all our city regions and other parts of the economy, such as Ayrshire and the Islands too.

A key item of economic infrastructure which requires a huge injection of momentum is the house building sector, but although the Chancellor announced a significant funding boost, which will presumably be followed through in Scotland following previous similar announcements, there was little to encourage innovation or greater choice, e.g. levelling the tax treatment for redevelopment to that for green field sites. Similarly, although the Apprenticeship Levy aims at the right target, i.e. productivity, the devil of its implementation will be in the detail.

So, the content of this Autumn Statement, based upon a much more optimistic economic forecast from the independent OBR, neatly reflects the need for transition, but will it deliver the type that the Scottish economy needs?

Stephen Boyle, chief economist at Royal Bank of Scotland

In The Usual Suspects, Kevin Spacey plays Verbal Kint. Talking about Keyser Soze, Verbal says, “The greatest trick the devil ever pulled was convincing the world he did not exist.”

So too with the Chancellor. George the Spender has been hiding in plain sight. Wearing an austerity cloak, he raises public expenditure. After last week’s announcement, spending in 2020 will be 4 per cent higher in real terms than today.

His austere reputation derives not from the amount he spends but how it is distributed. Pensions are rising faster than prices. Some budgets are given large real increases. Extra spending there is greater than the total increase, meaning cuts in a range of public services.

There was little Scotland- specific content in the Autumn Statement. We will find out how John Swinney plays the hand he has been dealt in a few weeks. However, there were measures that matter to Scotland.

Four years ago oil and gas taxes earned Whitehall £11 billion. During the next five years the total will be under £1 billion, a consequence of a lower oil price and falling production and a sign of the challenges facing our oil and gas industry. Its plan to adjust to the new reality involves 40 per cent cost reductions, which will be painful.

A levy on employers with a pay bill of more than £3 million to fund apprenticeships was the biggest tax rise. Apprenticeship policy and funding are devolved. Presumably some of the proceeds, including payments by Scotland’s employers, will flow to the Scottish Government. But how much? How will that be determined? Will it be sufficient to fund the Scottish Government’s ambitions? Will the Scottish Government spend all of the proceeds on training?

Abandoning the tax credit cuts grabbed headlines. Yet the promised £12 billion reduction in welfare will be delivered. With pensioner benefits protected, the savings will still be found from cuts in the incomes of people receiving social support.

Stamp Duty on additional homes will curb the buy-to-let boom-let in the south. The Land and Buildings Transactions Tax is devolved. Scotland’s Government should decide whether mimicking the policy would be appropriate here.

Overall the fiscal position remains weak: debt falls to 71 per cent of national income in 2021, high for peacetime. Then an ageing population pushes it up. With interest rates set to remain low for years, combatting the next recession, when it comes, will need a healthy fiscal arsenal. The repair job has some way to run.