Scottish public finances show improvement

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Scotland’s public finances have continued to show some improvement over the past year, according to Scottish government statistics.

The Government Expenditure and Revenue Scotland (Gers) report said the country spent £13.4bn more than it raised in taxes in the past financial year.

The deficit as a percentage of the country’s GDP dropped from 8.9% to 7.9% – still four times higher than the UK.

The UK’s spending deficit dropped by £6.4bn to £39.4bn in 2017/18.

This was the lowest figure since since 2007, and the equivalent of 1.9% of the UK’s GDP.

The Gers figures have become a key battleground in the debate over Scottish independence in recent years.

Scotland had a relatively stronger fiscal position than the UK in 2010/11, but since then the position has been reversed – largely as a result of the collapse in the oil price.

The latest statistics estimated that Scotland’s total public sector revenue was £60bn in 2017/18, of which £1.3bn was from the North Sea oil and gas industry.

This was higher than the £266m of revenue from the North Sea in the previous year – but well below the £8bn the offshore industry generated in 2011/12.

Scotland’s share of total UK total revenue has also fallen in recent years from a peak of 9.7% in 2008/09, and currently stands at 8.0% of the UK total.

Total expenditure by the Scottish government, UK government, and all other parts of the public sector in Scotland was said to have increased put at £73.4bn, which was equivalent to 9.3% of total UK public sector expenditure.

Other key statistics from the report include:

  • Including North Sea oil revenue, Scotland’s public sector raised the equivalent of £11,052 per person last year – £306 per person less than the UK average
  • Scotland’s expenditure per person was £13,530, which is £1,576 per person higher than the UK average

Last year’s report estimated that Scotland’s spending deficit had been £13.3bn, or the 8.3% GDP, in 2016/17.

But these figures have now been revised upwards to £14.5bn and 8.9% of GDP.

First Minister Nicola Sturgeon welcomed the latest figures, which she said provided further evidence that the country’s economy was “on the right trajectory” despite the “limited powers” at the Scottish government’s disposal.

But the UK government’s Scottish secretary, David Mundell, said it was concerning that Scotland’s deficit as a share of GDP remained four times that of the UK’s.

And Scottish Labour leader Richard Leonard said the figures showed that “the SNP’s plans for independence would mean unprecedented levels of austerity for Scotland”.

Gers was described as the “authoritative publication on Scotland’s public finances” in the Scottish government’s White Paper on independence ahead of the 2014 referendum.

The report is compiled by statisticians working for the Scottish government’s chief economic adviser, and is free from political interference.

The Scottish government has published a list of answers to frequently asked questions about how Gers is compiled here.

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