Emergency Budget Review published

The Scottish Government published an emergency budget review in September 2022, after high inflation eroded the value of the Scottish Budget. The Finance Minister estimated the Scottish Budget "was worth around £1.7 billion less than it was worth in December 2021"¹. A separate passage in the same document dates the publication of an Emergency Budget Review (EBR) to 2 November 2022¹; the two dates are not reconciled in the document.

The review followed a meeting of the Scottish Government Resilience Committee on 11 August 2022, convened by the First Minister to discuss urgent steps to mitigate the cost of living crisis¹. The analytical group behind the later assessment was set up in May 2022 to bring together evidence on the emerging crisis and use it to appraise policy options and support cross government decision making¹.

The pressure on the budget came from inflation. UK CPI rose from under 0.5% in February 2021 to a peak of 11.1% in October 2022, the highest rate for 41 years¹. Food price inflation reached 19.2% in March 2023, the highest since 1977, and producers' input costs peaked at 24.1% in June 2022¹. The Bank of England raised interest rates 14 consecutive times from 0.1% in December 2021 to 5.25% in August 2023¹.

Separately, the Cost of Living (Tenant Protection) (Scotland) Act 2022, passed by the Scottish Parliament in early October 2022, imposed a temporary in-tenancy rent cap and a moratorium on the enforcement of evictions¹. Following the expiry of those measures on 31 March 2024, the rent adjudication process in the private rented sector has been modified for a period of one year¹.

Why it matters for households

The review was a response to inflation reducing what the Scottish Budget could buy, at a time when household costs were rising faster than incomes. From early 2022 to mid-2023 the rate of inflation outpaced median wage growth in Scotland, and inflation also rose faster than benefits were uprated¹. The fuel poverty rate increased from 24.6% in 2019 to 31.0% in 2022¹.

The document states that low income households were more financially vulnerable entering the crisis, faced higher rates of inflation than better off households in the earlier acute phase, and often pay more for essential goods and services¹. It lists women, disabled people, ethnic minorities, rural households, larger households, young people, students and carers, lone parents and single person households, households on income-related benefits, people narrowly ineligible for benefits and people with no recourse to public funds as particularly adversely affected, with some households holding several of these characteristics¹.

The report also notes that the large increases in inflation over the previous three years have effectively been "locked in", and that lower inflation does not mean prices are falling, only that they are rising less quickly¹. It adds that while the fall in inflation and stronger earnings growth produced a return to real earnings growth over the past year, polling shows many people, particularly in low income households, do not feel better off¹.

What happens next

The document records that CPI gradually reduced from October 2022 to reach the Bank of England's 2% target by June 2024, and that the Bank reduced interest rates twice in 2024, in August and November, from 5.25% to 4.75%¹. Producer input prices fell by 1.5% in the year to December 2024¹. The report, published in February 2025, expands on a more detailed report published by the same group in November 2022¹. No further budget review or fiscal event is set out in the document.