SCOTLAND’S economic growth will not return to pre-pandemic levels until 2024, Kate Forbes has warned as she delivered the draft Scottish budget.

The Finance Secretary confirmed that Scotland had suffered an unprecedented “economic shock”, triggering extra borrowing powers.

GDP is currently 7.1 per cent down on 2020 and is expected to continue to fall in the start of 2021.

Unemployment is forecast to peak at 7.6% in the second quarter of this year, after the jobs furlough scheme ends in April, and will remain higher than pre-pandemic levels until 2025/26

The Scottish Fiscal Commission, the independent body which sets the parameters of the budget, warned there would be a "degree of longer-term scarring", with economic activity around 4% lower at the beginning of 2025 than their previous forecast in February last year. 

Delivering the budget for 2021/22, Ms Forbes also announced a council tax freeze, with local authorities given an extra £90m, the equivalent of a 3% rise.

Councils have yet to set their budgets, but Ms Forbes said the money would help those who froze the tax.

She said: "The Budget provides an uplift in overall funding for local government, together with additional funding to deliver key priorities in early learning and childcare and social care, and significant funding increases for education, and police and fire services.

"In recognition of the unique pressures created by the pandemic for household incomes, the settlement also includes an additional £90m to compensate councils who choose to freeze their council tax at 2020-21 levels."

She confirmed income tax thresholds for the basic, starter and higher rates would rise by 0.5% inflation, while the top rate threshold of £150,000 was unchanged.

She said this would see most Scottish taxpayers pay less than their counterparts elsewhere in the UK.

She said: "We provide certainty and stability for Income Tax payers, with all Scottish taxpayers paying slightly less Income Tax in 2021-22 than in 2020-21, based on their current income."

Rejecting the “ill-judged” public sector freeze across England, she said public employees in Scotland would get a real living wage of at least £9.50 an hour.

There would be a minimum 3% increase for those earning up to £25,000 and a 1% increase for those earning up to £80,000 capped at £800.

She said the £44bn budget was focused on jobs, the pandemic and tackling inequalities.

The exceptional circumstances of coronavirus require an exceptional response, she said.

The pandemic had “shaken our society and economy to their core”.

Describing Brexit as a “wrecking ball”, the Finance Secretary went on: “Today’s Budget will help to bring much-needed support and stability, to ensure our economy recovers and we protect those who have been hit the hardest.

“Our approach continues to target support in the immediate term, as well as tracking a course over the coming year to build a fairer, stronger and greener country.”