NICOLA Sturgeon has left the door open to potentially tighten Covid rules after Boxing Day as she confirmed that no extra limitations with be enforced on Scots for Christmas Day celebrations.

The First Minister will update MSPs this afternoon after discussing with her Cabinet any further measures needed to curb the spread of the Omicron surge across Scotland.

Amid a funding row with the UK Government, a new report has suggested that the Scottish Government should be able to launch its own furlough scheme if needed in order to roll out public health restrictions without relying on financial help coming from Westminster.

Yesterday, Scotland recorded its highest test positivity rate since January this year, with 6,734 new coronavirus cases counted in the last 24 hours – the highest daily figure since September.

National Clinical Director Jason Leitch has warned that the peak of the Omicron wave may not arrive in Scotland until late January or early February – adding that “difficult choices” may be needed over patient care as hospitals become “very, very busy”.

Ms Sturgeon yesterday confirmed that people can plan Christmas Day celebrations based on the advice already issued. But she warned that “we are in a challenging situation”.

She said: “We’re seeing come to pass what we predicted – cases are rising, the proportion of all cases in Scotland that are now the Omicron variant has been rising as well.

READ MORE: Covid Scotland: Omicron spreading as new virus infections reach three-month high

“We’ve also seen people following the advice that we gave last Tuesday and I hope that will be beginning to have a bit of a suppressive affect ion infections.”

The First Minister insisted she is “not asking people to cancel or change their plans” for Christmas Day, but warned people will need to “go back to limiting your contact for a period as much as possible” after the festive weekend.

Ms Sturgeon said the aim was to “try to avoid a spike in infections as we come out that core Christmas Day and Boxing Day period” as Omicron cases continue to soar.

Speaking ahead of her announcement to Holyrood, she added: "Cabinet will look at the data and we will consider – we haven't taken any decisions – whether there are any other steps we need to take, both to slow down the spread of infection and to take account of the fact that because of the rising number of infections we are seeing quite high staff absences across the economy and in public services.

“If we are deciding to do anything else – as I say I am not changing the advice for individuals around Christmas – I will set that out to Parliament."

The First Minister will address MSPs amid a row with the UK Government over emergency funding for any further measures needed to help curb the rise in infections.

The Treasury claimed that it had “doubled” the amount of extra funding the Scottish Government will receive to help roll out any extra restrictions in the form of business support.

READ MORE: Covid Scotland: Extra Treasury funds could pave way for tighter restrictions

But SNP Finance Secretary Kate Forbes has warned that answers are still needed on how much extra cash she is being handed – labelling an extra £220 million announced by the Treasury as a "rough estimate" based on how much the UK Government thinks it will spend.

She added that "if they ultimately spend less, then we will need to repay the difference".

The war of words with Westminster emerged as a report drawn up by economic experts recommended that devolved governments should be provided with minimum funding guarantees as they were in the first year of the pandemic or enhanced borrowing powers to be able to properly tackle the economic turmoil caused by the crisis.

The stark document, drawn up by officials including from Institute for Fiscal Studies (IFS) and the Fraser of Allander Institute, also suggests that HMRC should examine the feasibility of making the furlough and self-employment income support schemes (SEISS) available on a geographical basis.

It adds that if feasible, devolved governments could be given the option of paying for furlough and the SEISS to be reinstated in their territories if they want to tighten public health restrictions out of step with the UK Government.

David Phillips, an associate director at the IFS and one of the authors of the report, said: "With the Omicron variant of coronavirus surging across the UK, it is vital to learn lessons from earlier waves of the pandemic for the devolved governments’ funding arrangements.

"If new policy and spending announcements start to come in quick succession, the devolved governments should swiftly be given some combination of the funding guarantees successfully deployed last year, and/or enhanced borrowing powers, to allow them to respond in a timely and effective way. Without such measures, they could find themselves uncertain about how much funding will be available until announcements are made for England, potentially holding up policy development and implementation."

Ms Forbes said the recommendations "underline and reinforce the points we have made in respect of Scotland’s current financial powers".

She added: “The pandemic has brought in to sharp focus the need for additional fiscal flexibilities for the devolved governments to be provided on an ongoing basis – including greater borrowing powers, reserve limits and year-end flexibility.

“Disputes over Covid funding from the UK Government shows exactly why the current arrangements do not work for Scotland and that we need more financial powers, including enhanced borrowing capabilities, to implement appropriate support measures during the pandemic.

“Additional flexibilities would allow the Scottish Government to mobilise and deploy funding in an effective and efficient way to support our businesses and citizens. The reserve and resource borrowing powers in the fiscal framework are insufficient to deal with the volatility inherent in its operation.

“Recent UK Government funding announcements have been unclear about the extent of new funding over and above previous indications. We urgently need the UK Government to confirm what additional funding is coming to Scotland and how much of it will have to be repaid in future.”

A Treasury spokesman said the UK Government had worked closely with devolved administrations, and continued to do so.

“The UK Government’s £400 billion Covid support package has supported people, businesses and public services in all parts of the UK, and we have just made £860 million of additional funding available to the devolved administrations to use how they see fit when tackling Covid-19,” the spokesman said.