Scotland will still be £9 billion in the red when the UK’s in the black

Picture: TSPL
Picture: TSPL
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Scotland would still have a £9 billion deficit when the UK as a whole moves into surplus in 2019/20, according to an economic analysis of the nation’s balance sheet.

John McLaren, honorary professor at Glasgow University, said falling North Sea revenues would result no improvement in Scotland’s fiscal balance this financial year.

The first sign of a recovery would be beyond 2015/16. But by 2019/20 when the UK is expected to record its first surplus in years, Scotland will be lagging behind with a deficit of £9 billion.

Professor McLaren’s analysis was based on projecting Government Expenditure and Revenue Scotland figures, which were published this week and showed that spending exceeded revenue by £15 billion in 2014/15.

“When the UK returns to balance (in 2019-20) Scotland is still around £9 billion

in deficit (just under five per cent of GDP),” Professor McLaren said.

“A deficit of this size roughly equates to the UK’s fiscal position as recently as 2014-15, so clearly such a position is manageable, although that does not mean it is an easy place to be, as on-going austerity shows.

“Moving to a position of fiscal balance (be it current balance, excluding investment, or overall balance) would require substantial tax rises or spending cuts. This may be do-able, but the, largely unexplored, question remains - how might it actually be done?”

He added: “With a second referendum on independence being mooted in the event of the UK voting to leave the EU, details on how any such deficit might be accommodated remains a relevant issue and concern.”

A Scottish Government spokeswoman said: “The GERS figures show our onshore economy is doing well, with onshore revenue having grown by more than £6 billion over the last five years, giving us a strong base to build our future progress on. This analysis shows that onshore revenues will grow by £19 billion up to 2020-21, vastly outstripping the decline in offshore revenues.

“Scotland’s fiscal position under independence would depend on a number of factors – including the public policy choices made by future Scottish Governments, the level of growth between now and day one of independence, and Scotland’s contribution to the UK-wide public services, none of which are reflected in the GERS figures.”