Either Liz Truss or Rishi Sunak could hold an emergency budget or other fiscal event after taking office in an attempt to tackle the crisis and the Deputy First Minister pledged to act quickly after Downing Street plans are announced.

Mr Swinney will update the Scottish Parliament on Wednesday, September 7 – a day after the First Minister unveils the 2022-23 Programme for Government – on how the Scottish Government will meet the costs of rising pressure on public sector pay.

The Scottish Government committed last month to undertake an Emergency Budget Review in order to assess any and all opportunities to redirect resources to those most in need, reduce the burdens on business and stimulate the Scottish economy.

This is part of a raft of measures to mitigate the growing cost emergency which is affecting people and businesses.

The Deputy First Minister said: “This year’s Programme for Government is set against a backdrop of economic upheaval that has not been seen for a generation, already impacting people, businesses, public services and the third sector across Scotland.

“For that reason, this is a different Programme for Government – one that is subject to the outcome of our Emergency Budget Review and its implications for our Budget for 2023-24.

“The UK Government’s existing spending plans, coupled with Bank of England inflation forecasts, mean that the Scottish Government’s funding will fall by 4.5% in real terms next year. If inflation rises significantly higher, the resources available to us will erode even further at the very time when costs are increasing.

“With the new Prime Minister due to be appointed this week it is vital that the UK Government now acts decisively to tackle this ongoing crisis.

“The Scottish Government is continuing to do everything within our powers and resources to help those most affected; however, the powers and resources needed to tackle this emergency on the scale required lie squarely with the UK Government. Further spending cuts to Scotland’s budget from the UK Government would be disastrous and would cost lives.”