SCOTLAND is facing its most brutal budget under devolution with Brexit-driven austerity hitting frontline services and public sector pay.

Finance secretary Derek Mackay set out the bleak outlook just over a fortnight before he unveils his annual spending plans.

Tory ministers have "started diverting cash from services to prepare for their Brexit damage," Mackay claimed. He warned this would have severe consequences for the Scottish Government budget, when it is published on December 14.

In response, a UK Government spokesperson said: “We are delivering for Scotland by giving a £2bn funding boost to the Scottish Government."

Frontline services will be squeezed due to ongoing Tory austerity, Mackay warned.

Public sector pay will also continue to come under strain, despite a pledge by Nicola Sturgeon to lift the one per cent cap on wage increases.

Mackay argued Scotland was suffering after a near decade of cuts passed on by Tory-led governments in London.

However, Mackay said this had been made worse by the Tory government hoarding cash to deal with the consequences of Brexit.

He said Scotland's block grant was cut in Chancellor Philip Hammond's autumn statement last month because of this.

Mackay said: "The UK Government’s autumn budget did not represent a good deal for Scotland – far from it.

"The Chancellor’s decision to cut our block grant for day-to day-spending on public services by over £200 million next year, down by 8.1 per cent over 10 years, brings new financial challenges on top of the pressures we were already facing.

"Trying to hide this cut under promises of three years of loans that the Scottish government cannot directly spend on frontline services is – even by the Tories’ standards – a pretty desperate exercise in smoke and mirrors, which didn’t stand up to five minutes’ scrutiny.

"The funding settlement is also challenging for our NHS. Despite a commitment of over £300m resource funding for the NHS in England, Scotland will receive only £8m of this due to UK cuts elsewhere."

Mackay warned that his budget would be the tightest delivered by a finance minister since the Scottish Parliament opened in 1999.

"The UK government have also started diverting cash from services to prepare for their Brexit damage," he said.

"When you take everything into account – the decade of Tory austerity, changing demographics, the impact of the pay cap, a worsening UK economy and an impending Brexit – it is no exaggeration to say that we are facing the most challenging budget in the history of the Scottish Parliament."

Mackay indicated that his budget will include help for public sector workers in line with the pledge to life the one per cent pay cap. However, the minister's language suggest that employees are unlikely to receive a substantial increase.

He said: "Public sector pay was an issue largely ignored in the UK budget, but we believe Scotland’s public sector workers deserve a pay rise. That commitment is not an easy one to deliver."

Mackay went on say that new tax powers devolved to Holyrood would not be sufficient to make up for Brexit-driven cuts.

He added: "Of course, with budget cuts landed upon us to resolve and increasing pressures ahead, no government can meet every demand – so this budget will be tough.

"We will do our best, as a responsible government – but even using our tax powers, in a balanced way, cannot fix every problem the Tories’ austerity agenda and impending Brexit have created."