GERS: SNP Finance Secretary Kate Forbes says record £36bn deficit 'not an obstacle' to independence
By SEAMLESS DAILY
18 August 2021
Public sector spending in Scotland increased by 21 % in the 2020-21 tax year, with the figure compounded by falling revenues and the price of oil.
total public expenditure in scotland for the financial year gone by, covering both scottish and uk government spending and the rest of the public sector, was £99.2bn.
Total spending in Scotland rose to a record £99.2bn, reflecting the costs of health and economic interventions such as furlough in response to the pandemic, while income from taxes fell to £62.8bn.
the deficit for the uk as a whole over the same period was 14.2 % of gdp.
The annual Government Expenditure and Revenue Scotland ( GERS ) report, compiled by Scottish government statisticians, illustrates how public finances were affected by the pandemic.
But opposition parties said the report underlined the importance of remaining within the UK, with Scottish Labour highlighting that total spending was equivalent to £18,144 per person – £1,828 per person greater than the UK average, while revenue raised in Scotland was £382 less per head.
The Fraser of Allander Institute- an economic think tank based at Strathclyde University- said the figures were "the largest ever seen in terms of the notional deficit", noting that the UK has also recorded its largest deficit since the second world war.
Director Mairi Spowage said the increase in the Scottish figure relative to the UK was "a little larger than we might have expected", due to a larger fall in Scottish GDP caused by the contraction of the North Sea oil industry.
Scottish Finance Secretary Kate Forbes said the "significant economic impact" of the Covid-19 pandemic had "fundamentally shifted our fiscal landscape".
However, Scottish Secretary Alister Jack said the figures "show how all of us in Scotland have benefitted from being part of a strong United Kingdom".
He added : "We have been able to weather the Covid storm as part of the UK but we now face the challenge of rebuilding our economy and supporting our heroic NHS and other public services.
That means supporting enterprise to deliver the jobs and growth we need by taking steps to build public and business confidence in the recovery."
Scotland's deficit more than doubled to £36.3bn, or 22.4 % of GDP in 2020-21, the highest yearly figure since devolution, but it should not be an obstacle to making the case for independence, according to Scotland's finance secretary.
While the GERS figures are an estimate, the Institute for Fiscal Studies has previously described them as "the most sensible starting point" for assessing the fiscal challenges that an independent Scotland would face.
Fresh questions have been raised about the economic of Scottish independence after official figures showed the country's public finances has an unprecedented black hole.
As well as the impact of coronavirus, the fiscal position was also affected by declining activity in the North Sea and a fall in oil prices.
"Having a deficit is not – self-evidently – a barrier to any country in the world being independent," she said.
Tory MSP Murdo Fraser, the party's shadow Covid recovery secretary, said the figures show the extent of the UK government ’ s "war chest" of support during the pandemic, such as the furlough scheme.
"These new figures demonstrate the strength and security that we gain as part of the United Kingdom," said Mr Fraser.
Of everything the Scottish economy produced in the last financial year, 22 % had to be borrowed to pay for public spending.
That's £1,828 more than the UK spend per head during last financial year- slightly higher than the year before.
For one side, GERS appears to shows that Scotland's economy is weaker than it should be.
For the other, it shows Scotland needs to be part of the UK.
She argues that Westminster has 70 % of taxation and 40 % of spending, and with limited borrowing powers, the SNP government at Holyrood does not have the levers to get the deficit down on its own terms.
If Kate Forbes did have those levers, it would force her to take decisions on how to raise taxation or cut spending, or both.
How about raising tax rates?
Not all supporters of independence, they are being asked to "unleash entrepreneurial potential and grow Scotland's competitive business base".
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