Scotland's public spending deficit falls below £24bn but continues to suffer from Covid pandemic

There was a £23.7bn black hole in government spending in Scotland last year as it continues to be hit by the Covid pandemic.

While the deficit saw a dramatic drop in the last year, it remains 12.3% of GDP – more than twice that of the UK as a whole.

The country’s public spending deficit more than doubled to £36.3bn in 2020-21 as spending increased and revenues fell due to Covid-19.

Scottish government statistics showed that total public spending dropped to £97.5bn as coronavirus interventions were phased out.

North Sea revenue, which affects Scotland’s fiscal position more than the UK’s, grew by £2.7bn in 2021-22, to reach its highest level since 2013-14.

The statistics are from the Government Expenditure and Revenue Scotland (GERS) report on Wednesday morning.

GERS estimates the gap between the amount of money raised through taxation in Scotland and what is spent on public services.

Last year saw the largest recorded fall in public expenditure, although it follows a record increase in 2020-21 in response to the coronavirus pandemic, and spending remains at historically high levels.

Overall, the Scottish Government spent £5.7bn in response to the coronavirus pandemic in 2021-22, down from £8.8bn in 2020-21.

Although spending on the pandemic fell, this has mostly been offset by increases in the cost of servicing public sector debt, the report’s authors said.

Although spending as a share of GDP has fallen from the peaks seen during Covid, it remains above 50% of GDP, and around 5% higher than pre-pandemic.

Deputy first minister John Swinney said: “Today’s figures show Scotland’s fiscal position is recovering faster than the UK’s, with a huge fall in the annual deficit thanks to the largest increase in revenues on record.

“This is before the full impact of the rise in oil prices that we’ve seen more recently, which is likely to see Scotland’s deficit fall faster than the UK’s again next year, with oil and gas revenue set to grow to £13bn this year.”

The Scottish Conservatives said the figures show Scotland’s “Union dividend” grew to the highest sum on record.

“These new figures underline the huge benefits we all gain from being part of a strong United Kingdom,” said shadow cabinet secretary for finance and economy Liz Smith.

“Every single person in Scotland is £2,184 better off because we are part of the United Kingdom.”