Fiscal framework outturn report: 2025

9. Borrowing

Capital Borrowing

79. Table 18 shows the Scottish Government’s capital borrowing plans.

Table 18: Capital Borrowing and Repayment Schedule (£ million)

£million	2020-21	2021-22	2022-23	2023-24	2024-25	2025-26	2026-27	2027-28	2028-29	2029-30	2030-31
Debt Stock at start of Year	1,617	1,744	1,814	2,026	2,227	2,245	2,576	2,716	2,835	2,937	3,033
New Borrowing in year (incurred)	200	150	300	300	139
New Borrowing in year (forecast)						472	300	300	300	300	300
Principal Repayments	52	60	67	79	100	120	129	132	135	125	115
Interest Repayments	13	14	16	24	34	39	37	34	31	28	25
Resource Cost of Borrowing Incurred	64	74	83	103	135	160	166	166	166	153	140
Principal Repayments	-	-	-	-	-	-	11	28	43	58	74
Interest Repayments	-	-	-	-	-	-	22	38	54	70	85
Resource Cost of Forecast Borrowing	-	-	-	-	-	-	32	67	97	128	159
Projected Total Resource Cost	64	74	83	103	135	160	198	233	263	281	299
Notional Borrowing Repayments	21	21	21	21	21	21	21	21	21	21	21
Debt Stock at end of Year	1,744	1,814	2,026	2,227	2,245	2,576	2,716	2,835	2,937	3,033	3,123
Debt Cap	3,000	3,000	3,000	3,000	3,050	3,145	3,249	3,316	3,380	3,444	3,513
Percentage of Debt Cap	58%	60%	68%	74%	74%	82%	84%	86%	87%	88%	89%
Headroom	1,256	1,186	974	773	805	569	533	480	443	411	389

Note 1: The 2023 Fiscal Framework Agreement states that from 2023-24 onwards, the statutory limit on borrowing for capital expenditure will be increased to and maintained at £3bn in 2023-24 prices. The annual limit on the amount of borrowing for capital expenditure will also be increased. From 2023-24 onwards, it will now be maintained at £450m a year in 2023-24 prices. Both limits will be uprated annually. These changes may impact on borrowing decisions, with decisions on borrowing to be set out at the next fiscal event.

80. In 2024-25 the Scottish Government drew down £139m of Capital Borrowing from the National Loans Fund at a fifteen year tenor with an interest rate of 4.47%.

81. The Scottish Budget: 2025 to 2026 outlined plans to allow for £472 million of Capital funding to be made available from borrowing.^[13]

82. In its report, “Scotland’s Economic and Fiscal Forecasts”, published on 25 June 2025, the Scottish Fiscal Commission judged the Government’s projections of capital borrowing as reasonable.^[14]

Resource Borrowing

83. Table 19 shows the Scottish Government’s resource borrowing plans.

Table 19: Resource Borrowing and Repayment Schedule (£ million)

£million	2020-21	2021-22	2022-23	2023-24	2024-25	2025-26	2026-27	2027-28	2028-29	2029-30	2030-31
Debt Stock at start of Year	-	207	505	480	476	353	219	103	702	837	683
New Borrowing in year (incurred)	207	319	47	104	-
New Borrowing in year (forecast)						-	-	663	222	-	-
Principal Repayments	-	21	72	108	123	135	116	64	27	11	-
Interest Repayments	-	0	4	6	9	7	5	3	1	0	-
Resource Cost of Borrowing Incurred	-	21	77	114	132	142	121	67	28	12	-
Principal Repayments	-	-	-	-	-	-	-	-	59	142	170
Interest Repayments	-	-	-	-	-	-	-	-	29	40	33
Resource Cost of Forecast Borrowing	-	-	-	-	-	-	-	-	89	182	203
Projected Total Resource Cost	0	21	77	114	132	142	121	67	117	194	203
Debt Stock at end of Year	207	505	480.3	476	353	219	103	702	837	683	513
Debt Cap	1,750	1,750	1,750	1,750	1,779	1,834	1,895	1,934	1,972	2,009	2,049
Percentage of Debt Cap	12%	29%	27%	27%	20%	12%	5%	36%	42%	34%	25%
Headroom	1,543	1,245	1,270	1,274	1,426	1,616	1,793	1,232	1,135	1,326	1,536

84. The Scottish Government must balance its Budget each year, and has specific and limited powers in relation to resource borrowing. Following the 2023 Fiscal Framework Review the Scottish Government's annual resource borrowing limit, and its statutory overall limit for resource borrowing, are both uprated annually using the OBR's GDP deflator forecast at the time of the draft budget. The latest uprated limits are £629 million for annual resource borrowing and £1.834 billion for cumulative resource borrowing for 2025-26.

85. Resource borrowing can only be used for the following reasons:

• For in-year cash management
• For forecast error (in relation to devolved and assigned taxes and demand-led welfare expenditure arising from forecasts of Scottish receipts/expenditure and corresponding UK forecasts for the block grant adjustments.

86. In 2024-25 the Scottish Government did not use Resource Borrowing. The 2024-25 Scottish Budge set out plans to borrow £338 million but this was adjusted to nil over the course of the financial year given the improvements to the overall funding position.

87. A positive £500 million reconciliation was applied to the Scottish Budget 2025-26 relating to 2022-23 Scottish Income Tax, 2023-24 fully devolved taxes and social security. No resource borrowing is currently forecast for use, however all resource borrowing decisions will be finalised at the end of the financial year based on the overall financial position.

88. The annual resource borrowing limit is subject to change based on in-year social security and devolved tax forecast changes. At this stage of the financial year the movements on forecasts – and BGAs – are too volatile to make any concrete changes to resource borrowing plans.

89. The Scottish Budget: 2025 to 2026 sets out the Scottish Government’s plans for resource borrowing and other sources of discretionary funding available.^[15]

90. The outstanding debt from resource borrowing was £353 million at the end of 2024-25.