A major economic think tank has forecast a further £24 billion shortfall in the UK’s public finances by the end of the decade, prompting renewed debate over the country’s economic direction and Scotland’s future within the United Kingdom.

The National Institute of Economic and Social Research said the UK’s fiscal position is expected to deteriorate compared with forecasts made at the Spring Statement earlier this year, raising fresh questions about how future spending commitments could be funded.

The think tank questioned whether Prime Minister Andy Burnham had fully considered how his commitments would be paid for and warned that the UK Government could face difficult choices between increasing taxes or reducing public spending.

It also forecast inflation continuing to rise until February 2027, peaking at 3.8 per cent, adding further pressure to household finances during the continuing cost of living crisis.

The findings prompted a response from the SNP, which argued the latest economic outlook underlined the wider challenges facing what it described as “Brexit Britain” and renewed its call for Scottish independence.

Commenting, SNP Westminster Leader Dave Doogan MP said:

“It took less than two weeks for Andy Burnham to run into the reality of broken Brexit Britain.

“The new UK Prime Minister spent his first days in office writing blank cheques, he is now gearing up to impose an autumn of austerity.

“The chronic and embedded failure of Brexit Britain has been repeatedly laid bare, every budget and every year sees the same pattern of painful policies that have hit people in the pocket for nearly 20 years.

“Burnham promised a different kind politics, but he now looks set to lock us into the same damaging cycle.

“That reality has clear constitutional consequences, the economic case for the United Kingdom has been torn apart by flatlining living standards, falling growth and constant chaos with Westminster.

“For the last generation Westminster parties and politicians have been promising ‘change’ and in that time things have gone from bad to worse.

“Burnham is the latest in that list.

“The uncomfortable truth for Burnham is that the foundations of this broken Westminster system are now beyond economic repair, it’s time to take Scotland’s future into our own hands, time to build anew.

“Scotland can escape from the constant crisis and chaos of Brexit Britain by choosing the fresh start of independence in Europe.

“All around us, small independent nations of a similar size are thriving in comparison to broken Britain, it’s time we took our place amongst them as an independent nation in the EU.”

The think tank’s latest assessment adds to the continuing debate over the UK’s long term economic outlook, with questions remaining over how future governments will balance public spending, taxation and economic growth in the years ahead.