Scotland's spending deficit doubles to £36bn due to pandemic

Scotland’s public spending deficit more than doubled to £36.3bn last year as a result of the coronavirus pandemic, new figures have shown.

The Government Expenditure and Revenue Scotland (GERS) release on Wednesday indicated that the deficit north of the border is 22.4% of gross domestic product (GDP).

The figure has increased by 13.6 percentage points in the last year from 8.8% in 2019-20, while the deficit in the rest of the UK rose by 11.6% to 14.2%.

When North Sea oil revenue is removed, Scotland’s deficit increases to 23.8%.

The figures also showed that public spending per head in Scotland is almost £2000 more than in the rest of the UK.

They showed that £1828 more per person is spent north of the border.

In Scotland, £18,144 is spent by public services per person, compared to £16,316 on average in the rest of the UK.

As GERS is published today, a reminder that 72% of revenue is reserved and 40% of spending is reserved to the UK Gov. The Scot Gov, on the other hand, must balance its resource budget to the penny every year as we can’t borrow for day to day spending. /1
— Kate Forbes MSP (@_KateForbes) August 18, 2021

Scotland’s finance secretary Kate Forbes said that Covid-19 had “fundamentally shifted our fiscal landscape”.

“These statistics clearly highlight the significant economic impact of the pandemic,” she said following the release of the GERS figures,” she said.

“Scotland’s economy contracted by about 10% last year, which is in line with the performance of the UK economy.

“The pandemic has not only changed people’s lives but it has fundamentally shifted our fiscal landscape, with countries and markets around the world reassessing what represents a viable deficit.

“The Scottish Government has worked tirelessly to support businesses and households throughout the pandemic. While we face continued challenges, there are welcome signs that the Scottish economy is beginning to recover strongly.

“Business confidence is back above pre-pandemic levels, output is increasing and job vacancies are rising. As we rebuild, we are pushing forward with an ambitious 10 year agenda of economic transformation to help seize Scotland’s potential and deliver a more prosperous, fairer and greener economy.”

“The UK Government has delivered a war chest to fight Covid, back our NHS, and support Scotland’s economic recovery.”
Murdo Fraser, Scottish Conservative MSP

Scottish Conservative Covid recovery spokesman Murdo Fraser said that the focus of the Scottish and UK Governments should be on delivering an economic recovery from the pandemic.

“These new figures demonstrate the strength and security that we gain as part of the United Kingdom,” he said.

“In times of crisis, when a pandemic hits, Scottish jobs and public services are safer because we act together.

“The UK Government has delivered a war chest to fight Covid, back our NHS, and support Scotland’s economic recovery.

“The Union dividend has increased and now every man, woman and child in Scotland is £2210 better off within the United Kingdom.”

Fraser added: “We are back on the road to recovery faster than anticipated because of the world-leading vaccine scheme and thousands of jobs have been protected by Rishi Sunak’s furlough scheme.

“As we start to move on from Covid, it’s vital that both of Scotland’s governments now focus 100% on rebuilding Scotland and delivering our economic recovery.”