Nicola Sturgeon’s plans to hike income tax for hundreds of thousands of workers are a “fundamental mistake”, David Mundell has said as official figures showed Scottish unemployment has spiked.

The Scottish Secretary described a 14,000 increase in the number of people out of work in the final three months of 2017 as “worrying” and business leaders urged the Nationalists to “change tack” on the tax hikes if there are “unintended consequences” for the economy.

SNP ministers attempted to blame Brexit for the figures, which also saw the number of Scots in employment falling by 20,000. However, the total in work across the UK increased by 87,000 over the same period.

They were published as the Scottish Budget for 2018/19, which included the tax hike, cleared its final parliamentary hurdle by 70 votes to 56 in the Holyrood chamber following a deal between the minority SNP government and the hard-Left Scottish Greens.

But Patrick Harvie, the Greens’ co-leader, warned Ms Sturgeon his party would refuse to enter discussions over next year’s Budget unless she agrees to a major council tax overhaul.

He wants to replace council tax with a system based on land value, which would see bills soar for families in medium-sized and larger homes.