Scottish ministers will be able to spend hundreds of millions more on public services each year after striking a deal with the UK Treasury to lift restrictions on its budgets.

The agreement will allow ministers in Edinburgh to double their annual borrowing to protect day-to-day spending to £600m, as well as increase the amount they can borrow for major projects by inflation and also keep underspends in later years, without any limits.

The deal also preserves a longstanding agreement where the Treasury heavily subsidises Holyrood’s spending under the so-called Barnett formula which redistributes spending around the UK, subsidising less wealthy areas.

The Treasury said that element of the updated fiscal agreement meant Scottish ministers had £8bn more to spend last year than they would have had if Scottish spending was set at the same per capita rate of spending for the UK as a whole.

Want to see Scotland under the SNP?

Sign up to receive our weekly newsletter and join the fightback against Scottish Nationalism.