New Gers figures: Scotland's finances may prove key battleground as war over independence begins in earnest – Bill Jamieson

The Gers figures, showing Government Expenditure and Revenue in Scotland, may have a significant impact on the independence debate, writes Bill Jamieson

Nicola Sturgeon and the SNP may be riding high in the polls but new Gers figures about the Scottish Government's finances may put a dent in their popularity (Picture: pool photo/Fraser Bremner/Scottish Daily Mail)
Nicola Sturgeon and the SNP may be riding high in the polls but new Gers figures about the Scottish Government's finances may put a dent in their popularity (Picture: pool photo/Fraser Bremner/Scottish Daily Mail)

Amid the continuing Covid-19 pandemic, social isolation and sporadic lockdowns, there’s one annual public ritual in Scotland set to draw an even bigger and more vocal public rave this week.

It is not despite the virus but precisely because of it that ’Gers’ – the latest Government Expenditure and Revenue Scotland numbers released yesterday – will ignite an even greater public storm.

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So far, Gers has barely troubled the ongoing surge in support for the SNP in the approach to next year’s Holyrood election – and with it the clamour for a second independence referendum.

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New GERS figures shows Scotland's deficit stands at £15.1 billion

The SNP is heading for a crushing victory. According to a YouGov survey of 1,142 Scottish adults conducted earlier this month, it was polling 57 per cent in constituencies for the Holyrood election and 47 per cent on the regional vote. A projection gave the SNP 74 seats, comfortably above the 65 seats required for a Holyrood majority.

As if this wasn’t enough to break unionist spirits, support for independence was holding firm at 53 per cent, much in line with recent polls.

Tories trailing, Labour facing disaster

SNP insiders had feared the pupil-grading scandal would dent their support. But the poll suggests more voters are flocking to the party.

The Tories trailed in second place on 20 per cent in constituencies and 21 per cent on the lists, a result that would leave the Scottish Conservatives with 29 seats – down from the 2016 election. And for Labour and its Scottish leader Richard Leonard it looks disastrous, with the poll suggesting it would be left with just 18 seats.

Yet barely anywhere in this resurgence has there been mention of Scotland’s economy and fiscal position, Gers, which formed such a ferocious, no-holds-barred battleground in Indyref One back in September 2014. Still less has there been discussion of border arrangements and the movement of people and goods between EU-aspirant Scotland and the non-EU rUK.

This is little short of astonishing given the marked deterioration in Scotland’s economy and in particular its fiscal position since that fiery engagement in 2014. The Gers statistics back then came under relentless assault for omission, bias and distortion. Now it seems as if a second vote on independence is to proceed on the basis of identity and wishful thinking alone. Just to be scunnered by the UK Government’s flawed handling of the pandemic is seen as enough to sweep Scotland to independence.

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‘An economy in crisis’

On those critical issues – the prospects for government spending, of a plan to reduce crippling levels of deficit and debt, of what currency we would adopt, and how business would fare with an intensive battery of cross-border checks and surveillance, Scotland opting to stay in the EU, while its biggest trading partner has left the EU – there has yet been precious little engagement.

Yet until there is, polls pointing to a shattering SNP triumph may prove meaningless. The Gers figures could be the spark that blows these issues wide open.

The closer we edge towards another independence vote, the more they will come to the fore. Gers describes not just Scotland’s fiscal balance today but also the income and spending commitments that an independent country would inherit.

For that reason, Professor Jim Gallagher – the former UK Government director-general of devolution and who was adviser to the Better Together campaign – last week warned “it matters more than ever in determining how much Scotland could afford to support an economy in crisis”.

Back to Project Fear and scare-mongering? This would be the charge of independence supporters who had no time for Professor Gallagher last time around.

And they would be quick to point out that other economies of similar size to Scotland are wrestling with this pandemic without a fundamental questioning of their sovereignty and the right to choose their own destiny.

Gers wars

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However, economic realities matter – and no less than here in Scotland, a country that seems permanently destined to be up against it. This existential challenge has long determined our response to events – and is today acute.

So where do we stand? Scotland is now officially in recession. Economic activity has dropped by nearly a quarter. More than 900,000 Scots have been furloughed, with wages paid by UK Treasury borrowing.

Scotland entered the pandemic with a budget deficit of £15.1 billion or 8.6 per cent of GDP – and this for the year to April before the full force of the pandemic struck. Now the UK looks set to borrow more than 20 per cent of GDP, with Scotland’s deficit likely to top 25 per cent.

Independence? Scotland will be tied to the pound and the Bank of England for the foreseeable future. Spending constraints will be acute – as will pressure to raise taxes on capital and income. When reality hits, the row will be even more contentious and bitter than previous “Gers wars” – and require a fundamental recasting of the independence argument and forecasts. In the months ahead, Indyref One could come to look a peaceful walk in the park by comparison.

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