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GERS data published

Scotland’s deficit soars as oil revenues slump

Money - own picScotland continues to spend more than it raises, leaving the country with a £15 billion deficit in the public finances, according to the latest data.

The Government Expenditure and Revenue Scotland (GERS) 2015/16 report, published today by the Scottish Government reveals that £1,200 more is spent on Scottish citizens than those elsewhere in the UK.

Scotland’s share of North Sea revenues was £76 million in 2015/16, compared with £2.25bn the previous year and nearly £11bn in 2011/12.

First Minister Nicola Sturgeon insisted that the Scottish economy remained strong and deflected the slump on to the long term impact of the Brexit vote.

Scottish Secretary David Mundell said the figures showed how Scotland continued to rely on the UK government.

“These figures show how being part of the UK protects living standards in Scotland,” he said.

“Scotland weathered a dramatic slump in oil revenues last year because we are part of a United Kingdom that has at its heart a system for pooling and sharing resources across the country as a whole.

“It is important that continues and the financial deal between the UK and Scottish governments, struck last year as part of the transfer of new tax and welfare powers to Holyrood, means real security for Scotland.

“The fact public spending was £1,200 per head higher in Scotland than the UK as a whole also demonstrates that the United Kingdom, not the European Union, is the vital union for Scotland’s prosperity.”

Following the greatly reduced North Sea revenues, he reiterated the UK Government’s commitment to the oil and gas industry.

He said: “No government is doing more than the UK to support their oil and gas industry.”

Claire Mack, Director of Policy & Place, SCDI, said: “These GERS figures highlight our challenging fiscal position and the need to prioritise increasing productivity, innovation, and internationalisation of businesses across every sector of the economy.

“The impact of the low oil price and lower growth highlights the need to ensure businesses are able to take the steps necessary to improve their competitiveness if there are to endure in this new environment – especially with the prospect of Brexit. 

“The stark numbers of this report show the importance of addressing the structural weaknesses of our economy, grasping technological change, and improving the agility of businesses and the public sector to respond and shape new trends and opportunities.

 “SCDI will continue to do all we can to support our members and push for reforms to strengthen Scotland’s economic resilience.”

Scottish Conservatives said the data showed that Scotland is £1600 per person better offer due to Scotland being part of the UK.

Scottish Chambers of Commerce said that Scotland’s economy can and should be performing better. Liz Cameron, chief executive, said: “The GERS figures make for disappointing reading. The Scottish economy can and should be performing so much better. Businesses are working hard to succeed and grow, creating and sustaining jobs and to drive up our productivity. 

“We need our Governments in Holyrood and at Westminster to focus, now more than ever, on the basics that our businesses need: a fair deal on taxation, investment in skills for our future and in our transport and digital infrastructure and services. 

“That is the best way of supporting the Scottish economy and recognising the central role that businesses must play. Scotland must be internationally recognised as the place to do business, where existing businesses are supported and new businesses are nurtured and attracted. 

“The GERS report is a wake up call that must be heeded.”

Murdo FraserScottish Conservative shadow finance secretary Murdo Fraser (right), said: “Today’s GERS analysis simply confirms the fact that Scotland benefits massively from being a member of the United Kingdom.

“When times are tough in Scotland, as they are now, the union means we can top up public spending so we don’t have to make huge cuts to the NHS or increase family tax bills.

“This union dividend amounted to £1,600 for every man, woman and child last year, according to these figures. That’s how unions work – when one member needs support, the union provides it.

“In recent days we have seen the First Minister fear-mongering over the UK’s decision to leave the EU in the hope she can hide the flaws in her own separation plan.

“This is the strongest signal yet that Scotland must get ahead and explore the potential of shale extraction.

“The oil industry is going through an extremely tough time and, while there are measures being put in place to help it recover, we need to do something in the meantime.”

Scottish Labour leader Kezia Dugdale said the figures should act as a “reality check” for those calling for another independence referendum.

“It’s clearer than ever that Scotland benefits from pooling and sharing resources across the UK,” he said.

“Being part of the UK means higher spending on the public services like education and the health service that we all rely on. That’s a strong, positive case for Scotland remaining in the UK – our most important social and economic union.”

Key points:

Given the low North Sea revenue, tax revenues generated in Scotland (£10,000 per head) were £400 per head less than across the UK as a whole.

Scotland’s deficit or borrowing is almost £1,700 per person larger than the UK average in 2015-16.

Scotland contributed 7.9% of UK tax and received 9.1% of UK spending in 2015-16, demonstrating how Scotland receives secure and stable levels of spending irrespective of the volatile tax revenues from the North Sea.

Scotland’s deficit worsened in 2015-16, while the UK’s as a whole improved. Scotland’s deficit as a share of GDP was 9.5% and this compares with 4.0% for the UK.

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