Highland Council's budget black hole soars to almost £40m from an expected £5m, with cuts set to follow

Highland Council's budget shortfall has ballooned to £39.2 million over three years — around £35 million more than anticipated when councillors agreed their budget in March — with the council only halfway through the first year of that plan. Higher interest rates driven by the Iran war and wider Middle East conflict are cited as key causes. Councillors will be asked to approve a three-pronged savings package at Thursday's full council meeting.

An "urgent action" paper was already sent to all managers in August, ordering them to freeze non-essential spend immediately.

Council tax rises and treasury measures are expected to generate £12.8 million of the savings, with deeper cuts still to be identified.

The gap is nearly eight times larger than the £5 million shortfall councillors planned for just months ago.