Scotland’s economy running a £12.6bn deficit, figures show

The country's deficit has fallen by £1.2bn from last year and sits at 7% of GDP.

North Sea: Oil and gas revenues were broadly in line with last year, at £1.2bn. <strong>STV</strong>
North Sea: Oil and gas revenues were broadly in line with last year, at £1.2bn. STV

The Scottish economy continues to run a substantial deficit, although it has fallen by £1.2bn in the last year to £12.6bn.

The shortfall between government spending and the money it raised in 2018-19 amounts to 7% of Scotland’s GDP, according to official statistics.

The UK as a whole is currently running a deficit of £23.5bn – or 1.1% of its GDP.

The annual Government Expenditure and Revenue Scotland (GERS) report showed an improvement in Scotland’s fiscal outlook in part thanks to a £3bn boost to onshore revenues.

Meanwhile, the tax take from North Sea oil and gas remained relatively stable, dropping to £1.2bn from last year’s figure of £1.3bn.

Public spending per head was nearly £1661 (13.6%) higher than that of the UK average, an increase from £1182 (10.2%) in 2014-15.

The Scottish Government warned a no-deal Brexit risked hammering the country’s revenues by up to £2.5bn a year.

Finance secretary Derek Mackay: “With record tax revenues, strong economic growth and near record low unemployment, Scotland’s economy and public finances are strong.

“Today’s figures show overall revenue in Scotland reached £62.7bn – exceeding £60bn for the first time – reflecting the strength of our economy.

“Our notional deficit has fallen while public spending has increased thanks to our efforts to grow the onshore economy and the strong performance of taxes in Scotland.

“The Scottish Government’s choices on taxation are helping to create a more progressive tax system.”

But he added: “A ‘no deal’ Brexit could reduce revenues in Scotland by around £2.5bn a year, holding Scotland back and demonstrating why people in Scotland increasingly recognise the importance of making our own decisions.

“These figures reflect Scotland’s position as part of the UK. The Scottish Government believes we could unlock our full potential with independence, allowing us to take the best decisions for Scotland.”

However, UK ministers said the figures boosted the case for Scotland staying in the union, and demanded action from the Scottish Government to bring its deficit in line with the UK’s.

Scottish secretary Alister Jack said: “Today’s GERS figures show clearly how Scotland benefits from being part of a strong UK with every man, woman and child in Scotland receiving a ‘Union dividend’ of nearly £2000 a year.

“These Scottish Government figures also show there would be a £12.6bn black hole at the centre of an independent Scotland’s finances.

“Real questions need to be asked about the First Minister’s stewardship of the country’s economy.”

Jack continued: “With Scotland’s deficit now more than six times greater than the UK average, the Scottish Government needs to take action.

“Scotland remains the highest taxed part of the UK. This is harming our economy and should be a huge concern to us all.”

Scottish Labour leader Richard Leonard commented: “These figures underline the importance to Scotland’s vital public services like our NHS of remaining part of the UK.

“A stand-alone Scotland would have one of the biggest fiscal deficits in the developed world, and the SNP’s shock treatment plan to close it is by dumping the pound and imposing unprecedented levels of austerity.

“It’s time for Nicola Sturgeon to admit that her independence plans would mean unprecedented cuts for Scotland’s schools and hospitals.”

You're up to date

You've read today's top stories. Where would you like to go next?