The chancellor has said Scottish Government funding will increase by £2.4bn, as he set out his spending review.
Rishi Sunak made the announcement as he warned the economic emergency facing the UK, caused by the coronavirus pandemic, had “only just begun”.
Official forecasts showed the UK economy was expected to shrink by 11.3% this year, without returning to pre-crisis levels until the end of 2022.
Speaking to the House of Commons, Sunak said: “Our health emergency is not yet over and our economic emergency has only just begun.
“So our immediate priority is to protect people’s lives and livelihoods.”
Office for Budget Responsibility forecasts show recovery is expected over the coming years, with growth of 5.5% forecast next year as coronavirus restrictions are eased, then 6.6% in 2022, 2.3% in 2023, 1.7% in 2024 and 1.85% in 2025.
The UK Government will borrow an eye-watering £394bn this year, equivalent to 19% of GDP – the highest ever recorded in peacetime.
While Sunak continued to allocate large sums to tackling the ongoing emergency he confirmed there would be restraint in pay awards for public sector workers and a cut in overseas aid.
According to the OBR forecasts, UK unemployment is set to soar to 7.5% in the second quarter of 2021 – with 2.6 million people out of work – falling to 4.4% by the end of 2024.
The chancellor set out a near £3bn restart programme to help get people back into work. The national living wage will increase by 2.2% to £8.91 an hour.
Sunak said £280bn was being spent on the coronavirus response this year.
Next year some £55bn was earmarked for public services dealing with the crisis, including an initial £18bn for testing, personal protective equipment and vaccines.
Scotland’s finance secretary Kate Forbes said the spending review illustrated the “damaging impact” of Covid and called for investment in recovery.
She added: “Not long ago, we were applauding key workers, many of whom are the lowest paid in the public and private sectors.
“Freezing their pay or suppressing the minimum wage isn’t fair, and makes very little economic sense at a time when we should encourage spending and consumption.
“In just over a month, the end of the transition period will see Scotland removed from the EU and yet the spending review hasn’t replaced in full, as promised, EU funding for our communities, research institutes or rural economy.
“The spending review was never going to replace the scrapped Autumn budget, and offers little clarity on tax rates or policies that inform the Scot Gov’s budget.”
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