Leaving the European Union without a deal will have a “catastrophic” impact on the Scottish economy, with measures to mitigate a hard Brexit not fully funded by the UK Government, Holyrood’s Finance Secretary said.

Derek Mackay warned that in these circumstances, there would have to be “choices in government” which could result in spending cuts.

While he said the Scottish Government has allocated cash it received from Westminster to help mitigate the impact of the UK leaving the EU, Mr Mackay added: “The information I have to date is the cost of Brexit, both to the Scottish Government and our agencies, to execute our no-deal plan will not be covered by the UK Government.

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Derek MackayFinance Secretary Derek Mackay said the impact of a no-deal Brexit on Scotland would be ‘catastrophic’ (PA)

“So it will mean choices within Government as to how far we can go in terms of our contingency plans or what else is re-prioritised, or indeed cut, to be able to pay to help mitigate the impact of that no-deal Brexit – which feels more likely, maybe more likely than ever, as a consequence of the Prime Minister and the UK Government’s handling of the situation.

“So it will have a catastrophic effect on our economy and have a negative impact on the fiscal position of Scotland as well.”

Addressing Holyrood’s Finance Committee on Wednesday about the economic uncertainty the country is facing as a result of Brexit, Mr Mackay said: “I don’t know when the UK Budget is going to be.

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“I don’t know if the UK Government knows when the UK Budget is going to be, I don’t think they fully know the content of that.

“I’ve seen rhetoric in the public realm about the Chancellor (Sajid Javid) talking about having an economic response (to a no-deal Brexit).

“I can only envisage that what he means by that is he understands the economic consensus is that if there’s a no-deal Brexit, we will be entering a recession.

“There will be business failure, there will be soaring unemployment, communities and the most disadvantaged in communities will be affected.

“There will be impacts of course on transport and supply and demand. And that contraction in the economy, I think, will be severe, and exports will be affected.

“All of that, in itself of course, is a negative economic consequence and would feed into the fiscal decisions that the UK Government and the Scottish Government would have to make.”