Scotland’s finances: economic recovery in the EU or economic retreat with Brexit

Today the Scottish Government published Government Expenditure and Revenue Scotland – or ‘GERS’ for short – for the year 2015-16. GERS is produced annually and provides estimates of total public spending in Scotland, as well as tax receipts for the previous five years.

Here’s what you need to know.

Growth in Scotland’s onshore economy more than offset a decline in offshore revenue.

GERS for 2015-16 shows that Scotland’s onshore economy – excluding North Sea revenues – continues to do well. In the last financial year onshore revenues increased by £1.9 billion. Since 2011-12, onshore tax receipts have grown at about the same rate as the UK as a whole – and are up by almost £6.4 billion.

The publication shows that North Sea revenues in the past year have declined. This is reflective of the challenges that continue to face the global oil industry today, and the fact oil prices are lower than virtually all forecasters – including the UK Government – previously predicted.

These figures don’t take account of the impact of Brexit.

Scotland faces challenges. Brexit has made those challenges harder. Brexit will be deeply damaging to Scotland’s economy and finances. Analysis published by the Scottish Government shows that leaving the EU could reduce Scottish tax revenues by between £1.7 billion and £3.7 billion a year by 2030. For the Scottish economy as a whole, it could cost up to £11.2 billion a year in the long term.

There is now a clear choice between economic recovery with a continued place in Europe – or economic retreat with Brexit.

Find out more about what the Tories aren’t telling you about Brexit here.

While the Scottish Government is taking action to boost Scotland’s economy post-Brexit, the UK government is yet to take any meaningful action.

The Scottish Government is bringing forward an additional £100 million of capital spending to boost the economy post-Brexit. This will be in addition to planned capital spending for 2015-16 and will include spending in health and other key infrastructure sectors. Projects worth almost £6 billion are already under construction as part of the Scottish Government’s Infrastructure Investment Plan.

The UK government, by contrast, has not taken any meaningful action to alleviate uncertainty or boost confidence in our economy since the EU referendum.

We continue to invest more in our public services and economic growth.

In government the SNP is investing in Scotland’s public services. GERS shows that the Scottish Government is investing £130 more per head than the UK Government on health, and £184 more on education. In fact, education spending has been rising while it fell in the rest of the UK.

The SNP Scottish Government is also investing more in growing our economy. Spending on economic development in Scotland is higher than the UK as a whole – to the tune of £76 per head. And, when it comes to capital investment, which accounts for spending on public infrastructure like hospitals and schools, spending is £105 higher per head in Scotland than in the UK as a whole.

The foundations of Scotland’s economy are strong.

• Over the last quarter, Scottish employment increased by 51,000 – the largest quarterly rise on record.

• Scotland also continues to outperform the rest of the UK on female employment, youth employment and unemployment.

• In terms of economic output per head – even excluding oil revenues – Scotland remains the most prosperous part of the UK outside of London and South-east England.

• Since 2006, the Ernst & Young Attractiveness Survey ranked Scotland in the top two locations in the UK outside of London for attracting inward investment.

• Typical pay in Scotland is, for the first time ever, higher than in England.
  
  

GERS tells us about the status quo and very little about the opportunities of independence.

Scotland is rich in human talent and natural resources. But we lack the economic levers to maximise growth in our economy, and invest according to our own priorities. Even after the Smith Commission powers are fully implemented, 71 per cent of taxes raised in Scotland will be controlled in Westminster. And, our ability to grow our population – and our tax base – is limited by the UK Government too.

With independence, the Scottish Government could design policies that are tailored to Scotland’s – not the UK Government’s – circumstances.

Dr Andrew Goudie, former chief economist to the Scottish Government, said in 2003 that GERS “tells us nothing…about the situation under independence.”