Scottish Economy Update

Independence would have caused a massive hole in the public finances, according to opposition MSPs.

The official Government Expenditure and Revenue Scotland report shows that Scotland's deficit was £12.4 billion between 2013/14. That's 8.1% of GDP compared to 5.6% for the rest of the UK. The figure is also down on the previous year by £1.9 billion.

Oil revenues also fell below £4 billion.

The First Minister said: “On average, Scotland paid £400 more in tax per person to the UK Treasury than elsewhere in the UK last year. That is the 34th year in which we have contributed more than the rest of the UK and is a testament to the inherent strengths of the Scottish economy. 

“Scotland makes higher revenue contributions than the UK as a whole, we have higher employment, lower unemployment than the other nations of the UK and our economy is growing at a faster rate than the UK as a whole.

“Including an illustrative geographic share of North Sea revenue, Scotland’s current budget balance deficit last year was 6.4 per cent of GDP and our net fiscal balance improved over the year despite record capital investment in the North Sea lowering oil revenues.

“Running a fiscal deficit is not uncommon. The UK has been in deficit in 43 out of the past 50 years and its deficit currently stands at £97 billion. The vast majority of developed countries also run a deficit. 

“Under the status quo, Scotland’s fiscal position has fluctuated year on year and over the last ten years our current budget balance – the extent to which current taxpayers are funding current services – has been, on average, stronger than the UK at -3.4 per cent of GDP compared to -3.5 per cent of GDP. 

“However, such analysis tells us very little about the choices and opportunities with greater autonomy. It shows Scotland under the status quo, without full access to the levers to grow our economy and use the proceeds to invest in public services.

“We have the capacity and the resources to grow our economy, address inequalities, grow small businesses and put more people back to work. But to do that we need more economic powers and the ability to protect Scotland against the anticipated £14.5 billion in cuts that Westminster plans over the course of the next parliament.

“Going forward, these figures illustrate once again the need for the Scottish Government to have full control of job-creating powers. If we held the levers of our economy in our own hands and were able to invest according to our own priorities, we could make a very significant positive contribution to growing our economy.”

Scottish Liberal Democrat leader Willie Rennie has said that today’s GERS figures have shown that the SNP’s independence plans would have caused a massive hole in the public finances.
 
Mr Rennie said: "If Scotland had voted yes to independence these GERS figures would have been more than an academic discussion. Instead our political leaders would be in a blind panic desperately seeking to plug this massive hole in the public finances.  Nationalists promised us a second oil boom to win the referendum but our schools, hospitals and universities would be feeling the ramifications of an oil slump."

The Secretary of State for Scotland Alistair Carmichael said: “Today’s figures from the Scottish Government put the case for remaining in the UK beyond all doubt. It is concrete proof that Scotland’s public spending is protected and receives secure and stable levels of funding, alongside the ability to absorb economic shocks more effectively. These figures are based on a high oil price of over $100 rather than the current price, emphasising the need for us to pool our risk and resources in the future. The benefits include the £2.3 billion in extra spending the Scottish Government has received above and beyond its budget since 2010.

“Today’s figures will force the long overdue retirement of a number of economic myths used by those who argue for Scotland leaving the UK.  There is no way to avoid these hard facts and attempting to do so would simply be irresponsible.”