Scotland’s spending deficit holds in face of dwindling oil taxes and ‘Brexit’

Scotland’s public spending deficit has held at about £15 billion in the past financial year, according to the Government Expenditure and Revenue Scotland (GERS) figures published today.

Plummeting oil revenues in the face of record low global prices have seen North Sea revenue fall by about 97 per cent from £1.8 billion in 2014/15 to £60 million last year, the official Scottish Government statistics show.

At the same time, Scotland spent £14.8 billion more than it raised in taxes, including a share of the much reduced North Sea revenues.

That figure represented a 9.5 per cent share of GDP, the report said - more than double the 4 per cent figure for the UK as a whole.

The UK’s spending deficit is £75.3bn.

Responding to the report, Secretary of State for Scotland David Mundell said the fact Scotland’s spending deficit had not widened was down to Scotland’s place within the United Kingdom.

He said: “These figures show how being part of the UK protects living standards in Scotland.

“Scotland weathered a dramatic slump in oil revenues last year because we are part of a United Kingdom that has at its heart a system for pooling and sharing resources across the country as a whole.

“It is important that continues and the financial deal between the UK and Scottish governments, struck last year as part of the transfer of new tax and welfare powers to Holyrood, means real security for Scotland.

“The fact public spending was £1,200 per head higher in Scotland than the UK as a whole also demonstrates that the United Kingdom, not the European Union, is the vital union for Scotland’s prosperity.”

However, Scotland’s First Minister Nicola Sturgeon said that while the “foundations of the Scottish economy remain strong”, the impending exit from the EU enforced by the rest of the UK was a ‘direct threat’ to that stability.

She said: “The lower oil price has, of course, reduced offshore revenues, with a corresponding impact on our fiscal position - this underlines the fact that Scotland’s challenge is to continue to grow our onshore economy.

“However, Scotland’s long-term economic success is now being directly threatened by the likely impact of Brexit.”

Liz Cameron, chief executive of the Scottish Chambers of Commerce, said: “The GERS figures make for disappointing reading. The Scottish economy can and should be performing so much better. Businesses are working hard to succeed and grow, creating and sustaining jobs and to drive up our productivity.

“We need our Governments in Holyrood and at Westminster to focus, now more than ever, on the basics that our businesses need: a fair deal on taxation, investment in skills for our future and in our transport and digital infrastructure and services.

“That is the best way of supporting the Scottish economy and recognising the central role that businesses must play. Scotland must be internationally recognised as the place to do business, where existing businesses are supported and new businesses are nurtured and attracted.

“The GERS report is a wake up call that must be heeded.”