Fiscal framework outturn report: 2026

9. Borrowing

Capital Borrowing

70. Since 1 April 2017, the Scottish Government has had the power to borrow up to £450 million each year, up to a maximum total of £3 billion, to support investment in capital infrastructure. Principal payment and interest are paid out of the Resource Departmental Expenditure Limit.

71. Following the 2023 Fiscal Framework Review both limits will be maintained in 2023-24 prices (meaning these limits will be uprated annually using the OBR's GDP deflator forecast at the time of the Scottish Government draft Budget). The uprated limits are:

2025-26: £471.7 million (annual)

2025-26: £3,144.5 million (cumulative)

2026-27: £491.2 million (annual)

2026-27: £3,274.5 million (cumulative)

Table 17 shows the Scottish Government’s capital borrowing plans.

• Projections are based on borrowing incurred plus plans outlined at the Scottish Budget 2026-27, with interest rates applied as of 17 September 2026. A premium is applied to all future interest rate assumptions.
• Forecast Debt Cap limits are based on GDP deflator forecasts as at the UK Spring Forecast 2026, which will be revised annually.

72. In 2025-26 the Scottish Government drew down £430m of Capital Borrowing from the National Loans Fund at a 10-year tenor with an interest rate of 4.8%.

73. The Scottish Budget 2026-27 outlined plans to allow for £491 million of Capital funding to be made available from borrowing.^[11]

74. The SFC judged the Government’s projections of capital borrowing as reasonable in its Economic and Fiscal Forecasts, published in January 2026.^[12]

Resource Borrowing

75. Table 18 shows the Scottish Government’s resource borrowing plans.

• Projections are based on borrowing incurred plus plans outlined at the Scottish Budget 2026-27, with interest rates applied as of 17 September 2026. A premium is applied to all future interest rate assumptions.
• Forecast Debt Cap limits are based on GDP deflator forecasts as at the UK Spring Forecast 2026, which will be revised annually.

76. The Scottish Government must balance its budget each year, and has specific and limited powers in relation to resource borrowing. The Scottish Government can borrow up to £600 million for resource annually within a statutory overall limit for resource borrowing of £1.75 billion. These limits are set in 2023-24 prices and are uprated annually using the OBR's GDP deflator forecast at the time of the draft Scottish Budget.

77. 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.

78. In 2025-26 the Scottish Government did not utilise the resource borrowing facility as it was not needed to achieve a balanced budget. The positive impact of tax and social security forecast variances and reconciliations on the funding position contributed to this balanced position.

79. A positive £354 million reconciliation was applied to the Scottish Budget 2026-27 relating to 2023-24 Scottish Income Tax, 2024-25 fully devolved taxes, 2024-25 social security and a negative £7 million deferral for the impact of final 2023-24 social security outturn in the previous budget. Resource borrowing decisions will be finalised at the end of the financial year based on the overall financial position.

80. 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.

81. The 2026-27 Scottish Budget set out the Scottish Government’s plans for resource borrowing and other sources of discretionary funding available.^[13]