Scotland’s deficit has more than doubled to £ 36.3 billion, or 22.4% of GDP in 2020-2021, the highest annual figure since decentralization, but that shouldn’t be a hindrance in defense of independence, according to Scotland’s finance secretary.
Rising spending and falling income following the Covid-19 pandemic, compounded by the continued fall in oil prices, have reduced Scotland’s notional deficit for 2020-2021 by 8.6% of GDP in 2019-20 at 22.4%.
That’s significantly higher than 14.2% for the UK as a whole, and more than double the advanced economy average of 11.7% estimated by the International Monetary Fund. This figure could exclude an independent Scotland from EU membership due to budget deficit rules.
But Scotland’s finance secretary Kate Forbes said deficits had risen dramatically across the world in the wake of the pandemic, adding: in Europe does not appear to be an obstacle for the UK government … it’s about having the levers, full control to manage our fiscal sustainability.
The Government Expenditure and Revenue Scotland (GERS) annual report, compiled by Scottish government statisticians, illustrates how public finances have been affected by the pandemic. It measures the period from April 2020 – a week after the start of the first national lockdown – to the end of March of this year and includes a geographic share of North Sea oil.
Total spending in Scotland hit a record £ 99.2bn, reflecting the costs of health and economic interventions such as time off in response to the pandemic, while tax revenue fell to £ 62.8bn sterling.
But opposition parties said the report underscored the importance of staying in the UK, with Scottish Labor pointing out that total spending amounted to £ 18,144 per person – £ 1,828 per person more than the UK average, while the income generated in Scotland was £ 382 less per lead.
The Scottish Tories calculated that this ‘union dividend’, the combined value of higher spending and lower income, had risen to £ 2,210 per person.
Scottish Labor deputy leader and Covid recovery spokesperson Jackie Baillie said: “Today’s GERS statistics clearly show how the people of Scotland are benefiting financially from being part of the UK. “
She added that it was “reckless beyond imagination to pursue a confrontational and economically catastrophic referendum during the recovery”.
Nicola Sturgeon said during Holyrood’s election campaign earlier this year that her “strong preference and intention” was to hold another referendum in the first half of parliament, until 2023.
Forbes said she “remains committed to refreshing the economic record [for independence] … When we can see beyond the pandemic ”.
Although the GERS figures are an estimate, the Institute for Fiscal Studies has previously described them as ‘the best starting point’ for assessing the budgetary challenges an independent Scotland would face.
Forbes said it was a “theoretical deficit – not an actual deficit – estimated on 70% of UK government taxation and 40% of UK spending decisions.” The Scottish Government in the event of independence could and would follow a different agenda when it comes to the management of our economy. “