Scottish economy

Sturgeon claims economy is ‘on the right trajectory’ for independence

Fist Minister Nicola Sturgeon and Labour leader Richard Leonard.

By Bill Heaney

SNP members in West Dunbartonshire and other supporters of independence will welcome today’s announcement that Scotland’s public finances have continued to show some improvement over the past year.

Scottish government statistics show that 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 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.

BBC Scotland reported that the latest statistics estimated that Scotland’s total public sector revenue rose by about £3bn to £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 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.

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.

And she rejected the suggestion that higher public spending north of the border despite the deficit was a “persuasive argument for the union”.

The sustainable growth commission, chaired by ex-SNP MSP Andrew Wilson and published in May, addressed three broad challenges to the party.

They were: to find a way to grow the economy faster; to find a more credible argument about currency than the one used in 2014; and to face up to the scale of the public sector deficit.

On the latter, it suggested the use of higher taxes and a squeeze on spending growth.

Mr Wilson concluded that such an approach might take nine years of falling deficits before hitting the level at which borrowing is widely seen as being sustainable. That’s 3% of national output, a target recognised also by Nicola Sturgeon, while Gers points to a deficit last year of 7.9%.

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

Scottish Liberal Democrat Leader Willie Rennie said: “Whichever way you look at it, under nationalist plans all the good things we all want to do in Scotland would be under threat because of funding cuts.”

Scottish Green Party co-leader, Dumbarton Academy-educated Patrick Harvie, believed the figures were “another reminder” that the Scottish economy was “too focused” on oil and gas extraction.

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

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