THE annual publication of the Government Expenditure and Revenue Scotland (GERS) report always prompts frenzied discussions over the state of Scotland’s finances and whether the country should be independent.
Today’s figures will be especially politically significant as they will be the ones used in a possible new independence referendum campaign if a new vote is held next year.
The headline number that politicians and journalists seize on is the size of the public deficit – the amount by which spending exceeds revenue collected through taxes. Last year’s GERS report revealed a deficit of 7.9% for 2017/18, an improvement on 8.9% for 2016/17.
READ MORE: GERS: Scotland's public spending deficit down by more than £1bn
For the pro-Union parties the deficit is proof Scotland “is too wee and too poor” to be independent.
But what this ignores is that it’s perfectly normal for countries to run a small budget deficit. Out of the 28 EU nations in 2018, half of them spent more than they raised in taxes.
The Scottish Government also points out that the GERS figures do not reflect the strength of the economy but report only on public-sector revenue and expenditure.
READ MORE: ‘Rattled’ pro-UK parties attack Sturgeon for missing GERS figures
Last year’s report stated: “Although these may be affected by economic performance, GERS does not directly report on Scotland’s wider economy.
“If users are interested in the measurement of the economy as a whole, they should examine other economic statistics products, such as the quarterly gross domestic product figures or Quarterly National Accounts Scotland. These publications provide estimates of real-terms growth in the economy, and GDP in cash or nominal terms and its components.”
According to the Office for National Statistics, Scotland is in the top 25 global economies in terms of income per capita and has at least 34% of the UK’s total natural wealth, including wind, water, timber, oil and gas.
A further problem with GERS is that they are an estimate of Scotland’s public finances as they assign to the country a share of some expenditure which takes place outside Scotland.
On this issue, last year’s report explained: “For example, expenditure on embassies occurs outside Scotland, but provides benefits to Scottish residents and companies, such as Scottish tourists requiring consular services. As such, Scotland is allocated a population share of this expenditure in GERS.
“Likewise, spending on museums in Scotland benefits visitors from the rest of the UK, so not all of this spending is assigned to Scotland in GERS.”
However, the biggest point made about the figures from the pro-independence standpoint is that they do not reflect what the economy of an independent Scotland would be like and that the deficit is a symptom of the damaging effects of the Union and demonstrate how UK economic activity is concentrated around and balanced in favour of London and the south-east of England.
“What is undoubtedly true is that the current position of the country’s public finances is an imperative for change rather than staying the same,” said the SNP’s Growth Commission report, published last year, which took GERS as a starting point to set out the economic case for independence. “It is a reflection of the policies and structures that have created the scale of the estimated deficit as it stands, rather than those that would seek to put it right.”
The commission underlined that the figures assign a share of UK spending to Scotland on policies which an independent Scotland would not pursue, such as the renewal of the nuclear weapons system Trident. Scotland would also spend less on the UK’s grand network of foreign embassies, the Growth Commission added.
Additional powers that come with independence allowing Scotland’s economy to grow are also not taken account of in GERS.
While the Scottish Government has recently gained responsibility for limited tax and welfare powers, it lacks the real levers – such as powers over immigration – that will enable it to take full economic control, increase revenue from an expanded income tax base and help the nation prosper, matching the performance of other small nations around the world.
Why are you making commenting on The National only available to subscribers?
We know there are thousands of National readers who want to debate, argue and go back and forth in the comments section of our stories. We’ve got the most informed readers in Scotland, asking each other the big questions about the future of our country.
Unfortunately, though, these important debates are being spoiled by a vocal minority of trolls who aren’t really interested in the issues, try to derail the conversations, register under fake names, and post vile abuse.
So that’s why we’ve decided to make the ability to comment only available to our paying subscribers. That way, all the trolls who post abuse on our website will have to pay if they want to join the debate – and risk a permanent ban from the account that they subscribe with.
The conversation will go back to what it should be about – people who care passionately about the issues, but disagree constructively on what we should do about them. Let’s get that debate started!
Callum Baird, Editor of The National
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules hereLast Updated:
Report this comment Cancel