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GERS isn’t perfect but is a timely wake-up call

Terry MurdenTaken at face value, the report published yesterday on Scotland’s revenue and spending should tell the Holyrood government exactly what it doesn’t want to hear: that Scotland lacks the means to support itself as an independent nation.

Finance Secretary Derek Mackay clung to the rising revenue figure to promote Scotland’s growing economy as evidence that the data was heading in the right direction.

Everyone outside the SNP was pointing to the higher cost per head spent on public services and the stubbornly high deficit which, if sustained, would erode any chance of Scotland rejoining the EU.

Yet the GERS figures do not in themselves kill the case for independence. As Graeme Roy of the Fraser of Allander Institute points out, the data is a balance sheet based on the current constitutional settlement rather than a projection of what might be.

That said, the Growth Commission, which was supposed to give the independence campaign a lift, offers few outstanding arguments to back it and indeed leans towards the realities of the GERS findings.

Understandably the opposition parties have seized on the GERS document to urge the First Minister to drop the calls for independence referendum, arguing that the figures reveal the extent to which Scotland remains dependent on the UK. The figures show a UK deficit substantially lower and heading for surplus.

One big weakness in this argument is that GERS provides a set of figures which some believe are not truly representative of this so-called gap. The UK figure is hugely influenced by the robust south east economy which brings the deficit down, when other regional economies such as Wales and the north east of England will be closer to the Scottish figure.

Some may say that this ‘reliance’ on London and the south east – the so-called union dividend – is precisely why keeping the UK intact helps us all, from Brechin to Brighton.

Mr Mackay and Ms Sturgeon say the opposition has failed to offer any alternative to stimulating the Scottish economy which shows few signs of diverting from its low-growth trend.

But nor is this a case for going it alone. If Scotland is to maintain its current standard of living in the absence of self-induced growth then it has to draw on the riches provided elsewhere.

While Labour calls for higher public spending and higher taxes, it must also be accompanied by a clampdown on spending as the only solution to getting the economy anywhere close to living within its means and ensuring it remains competitive.






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