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The latest economic figures from the Scottish Government reveal Scotland faces an eye-watering public spending gap of more than £40 billion this year. The official figures showed Scotland’s fiscal deficit grew to 8.6 percent of GDP in the 2019/20 financial year, with government spending £15.1 billion more than is received in revenues.
The deficit rose from 7.4 percent the previous year, while the UK’s deficit stood at 2.5 percent compared to 1.9 percent last year.
The deficit figure was more than treble the UK figure of 2.5 per cent and nearly three times the 3 per cent required for EU membership.
Current EU regulations state if Scotland became independent and wanted to re-enter the EU, it would be expected to cut its deficit to less than 3 percent of GDP.
Only two of the EU’s 27 member states had a deficit of 3 per cent or more last year and Scotland’s figure is twice that of the worst-performing country which is Romania at 4.3 percent.
The Government Expenditure and Revenue Scotland (GERS) report also exposed a deepening hole in the country’s finances.
The figures, published yesterday, revealed total public spending per person in Scotland was £14,829 in 2019/20, £1,663 more than the UK figure of £13,196.
It also showed the average Scot contributes £12,058 to public funding through taxation, when a geographic share of oil revenue is included, which is £308 less than the UK average.
Tax revenues increased by £436 million last year to almost £65.9 billion, although the amount provided by North Sea oil and gas halved from £1.4 billion to £0.7 billion.
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Kate Forbes MSP, Scotland’s Finance Secretary claimed it proved the need for independence insisting a breakaway Scotland could rely on economic growth to avoid brutal cuts.
Speaking during a briefing yesterday, Ms Forbes also stressed her call for the Scottish Government to have further financial powers.
She said: “Although GERS is not the Scottish Government’s budget and reflects the current constitutional arrangements whereby another government’s policy choices are allocated to Scotland, the publication sets out the context for why the status quo and the present constitutional arrangements are unsustainable.”
Ms Forbes said it was “incredibly frustrating” that Scotland could not borrow to invest in recovery.
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She added: “Gers reflects the current constitutional position, there are perfectly legitimate questions to ask about these figures, but based on these figures nobody can or should defend the status quo of the current constitutional arrangements.
“Instead, this publication once again strengthens calls for additional fiscal and economic powers to manage our public finances in a sustainable way and invest in recovery.”
She blamed Brexit and an “unprecedented health and economic crisis” on the ballooning deficit and said a separate Scotland could make different economic choices from the UK Government.
Ms Forbes claimed it could use a series of fiscal “levers” like any other country.
But repeatedly pressed on what she had in mind, she cited higher growth without stating how this would be achieved and more borrowing.
She added: “Scotland simply cannot afford not to have the powers of a normal independent country. I think it’s perfectly possible to manage your public finances without inflicting austerity.
But Murdo Fraser MSP, Scottish Conservative finance spokesman said the figures do not take into account the “blockbuster support” from the UK Government, such as the furlough scheme.
He said: “This is a hammer blow to the SNP and a massive setback for separation.
“Nicola Sturgeon would have to throw away Scotland’s entire NHS, every nurse and doctor, just to come close to balancing the budget in her separate state.
“It’s beyond dispute that the economic case for independence has never been weaker.
“Separating would cost Scotland £15 billion a year that we need for our schools and hospitals.”
Richard Leonard MSP, leader of Scottish Labour, said: “With billions draining from the Scottish economy in the event of separation, Scotland would be thrust into years of savage and unrelenting austerity.
Wendy Chamberlain MP, Scottish Liberal Democrat finance spokesperson, said: “It’s the warm jacket of the United Kingdom that has kept, and will continue to keep, public service spending going through the bitter economic chill of this crisis.
“These numbers from before the crisis really drive home just how economically valuable the partnership across these isles is.”
Pamela Nash, chief executive of Scotland in Union campaign group warned leaving the UK would result in “devastating cuts for our NHS and schools and added: “The SNP’s blueprint for separation would cause economic hardship for families and wreck our hopes of economic recovery following COVID-19.”
The impartial Institute for Fiscal Studies (IFS) has also warned Scotland’s deficit could be as high as 26 to 28 percent of GDP by the end of the year and still be over 11 per cent by 2025.
The think-tank said this amounted to just over £40 billion in 2020/21, compared to a UK deficit of £372 billion or 19 percent of GDP.
Responding to the figures, Alister Jack, Scottish Secretary, added: “The Scottish Government’s own figures show clearly how much Scotland benefits from being part of a strong United Kingdom, with the pooling and sharing of resources that brings.”
Additional Reporting by Tom Martin, Scottish Daily Express Political Editor
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