The announcement is particularly important because it will not only cover its financial plans for next year, but for the three years up until 2011. This will give a much clearer idea of its programme for government over its four-year term — and of the prospects of it delivering on the economic priorities for the Highlands and Islands.

Following Chancellor Alistair Darling's recent statement on the UK Government's Comprehensive Spending Review, its task will not have been an easy one. While the Scottish Budget has doubled since devolution, the spending increase was significantly tighter than previous years. Tough decisions will need to be taken to prioritise budgets and invest in the needs of the economy over the next four years.

Delivering its commitment to a reduction in business rates for small and medium-sized enterprises has become all the more important after the Chancellor's announcement on changes to Capital Gains Tax. In particular, his decision to abolish the lower, so-called "taper relief" of 10 per cent for business creators who hold on to their assets for two years or more and introduce a single rate of 18 per cent.

The net result for creators of small businesses in the Highlands and Islands will be an 80 per cent increase in Capital Gains Tax if and when they sell up. They have played a significant role in the economy's success and this measure will be a significant disincentive to building businesses in the long term.

I am sure that they would welcome a small business bonus from the Scottish Government at this time.

The changes may also discourage business angels from investing in companies with growth potential — their views will be interesting at the SCDI Influencers' Dinner in Inverness, with LINC Scotland and Highland Venture Capital, on 8th November.

Another priority for the Scottish Government should be tourism. If real terms growth targets are to be achieved, increased public funding is required, especially in regard to marketing. This must be supported by investment in transport infrastructure. SCDI urges that the money is found for Inverness Airport's terminal so that it can not only meet existing demand at the busiest periods, but accommodate forecast growth.

With public money tight, there is a need to think creatively about how to finance the essential infrastructure necessary to enable development. Now that the Treasury has dropped plans for a new UK tax on development, more local mechanisms could be initiated, for example to increase the stock of housing and availability of affordable homes in the Highlands and Islands.

Investment is also required to redress understaffing in many local authority planning departments.

Finally, none of these goals can be achieved without investment in education and skills. Despite the squeeze on spending, ministers have to remember that unless they continue to invest in the fundamentals, the First Minister will not achieve his objective of increasing sustainable economic growth to match the UK economy.

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