This coming Thursday Finance Minister Kate Forbes presents the latest Scottish Budget. Certainly a date for the diary, but business eyes are likely to be more focused on the Bank of England’s Monetary Policy Committee’s (MPC’s) latest findings, due out a week later.

That committee must decide whether the time is ripe – at last – to start edging UK interest rates up from their historic low level.

To remind, the MPC’s remit is to decide the appropriate monetary policy in order to work towards, in the medium to longer term, a level of the Consumers’ Price Index (CPI) around two per cent; but with an eye to the economic outlook.

Whilst I would dearly love to be a spy on the wall for next week’s session, I certainly would not wish to be one of the chosen few who will be making the decision.

They are likely to find themselves twixt the devil and the deep blue sea, with broadly equal levels of risk associated with the choices of hiking or holding.

Until very recently the odds looked to be heavily skewed towards a decision at the December MPC session to start the (necessary) process of edging interest rates upwards.

The CPI jumped in October to 4.2% year-on-year. This was an unexpectedly sharp increase from the already uncomfortable September rate of 3.7%; close to a 10-year high. Inflation risks were mounting.

The standard line from the Bank of England in recent months has been that the rise in the CPI through 2021 has been due to external and largely one-off factors – including but not exclusively energy prices.

On this basis it was open for the MPC to conclude that the above-target level of the CPI was a transitory phenomenon, with the rate of inflation set to return to target during 2022; and hence that an unduly early start to the hiking of rates was not essential.

A particular justification for delay was waiting and seeing what happened to the labour market once the furlough scheme came to an end. If employment fell while unemployment and vacancy rates rose, then the pressure on wage inflation would be much reduced.

On the other hand a continuing high rate of wage inflation would make the argument that the high level of CPI was temporary much more difficult to sustain.

The labour market data for September showed that the end of furlough had apparently been taken in the UK economy’s stride.

Employment rose by 0.4 percentage points, while unemployment declined by 0.5pp.

Vacancies rose to a new record high of nigh on 1.2 million and – critically – average pay increased by nearly 6%.

The MPC hawks saw their case for a rate rise well and truly made. The markets tended to agree, seeing the scene as set for a small rate rise in December.

This was perceived as the first of several over the next six to nine months, taking base rate from its historic low to a rate consistent with low and stable inflation.

The recent arrival on the scene of a new and worrying Covid variant has caused markets, MPC members and pundits to re-visit their views.

The key difficulty is that nobody knows how severe the economic impact of this new variant will be, whether a further lockdown of some degree of severity will be required and whether this could result in the macro economy nosediving once more.

This could in turn lead to substantial corporate failures and a rise in unemployment, given that the recovery remains fragile, as do the balance sheets of very many companies.

Meantime the latest output data are none too encouraging, with the level of gross domestic product in both the Scottish and UK economies remaining around 1% below pre-pandemic levels.

Further, the rate of GDP growth slowed significantly in the third quarter of this year, as compared to Q2.

In the UK the deceleration was from 5.5% to 1.3%. In Scotland the Q3 growth rate was just 0.8%, with services output increasing while the production and construction sectors fell back. The forward-looking Purchasing Managers Index shows how price pressures and supply chain problems are constraining businesses.

So to hike or not to hike? On balance another pause to watch and wait seems to make sense. A rate rise now, however seemingly trivial, could be another straw on a struggling camel’s back.

If, in the New Year, we are seen to be managing with the new variant, then rates can start their upward movement in January or February.

Returning to the Scottish Budget, there are a host of issues around the real economy which should be concerning Kate Forbes.

Here are three for starters.

First, even before the pandemic productivity was low and stagnant; now it appears to have fallen back further.

High and increasing productivity must be an essential component of a successful Scottish economy, in whatever constitutional context.

Second, the UK Budget did nothing to work towards “levelling up”. What can Ms Forbes set in train to that end – for now or after a review of the Fiscal Framework with the UK?

Third, what can we do about the supply chain?

The balance of imports has shifted from within to outwith the European Union, but there appear to be growing concerns amongst businesses across the UK about heavy trade and supply chain dependence on China, where the political and economic sands may be shifting.

Being outside the EU, with worries about the reliability of China as a key supplier, must generate further grey hairs for exporters and importers alike.