Scottish GERS ‘black hole’ shrinks by 13% in one year
Earlier we published a blog detailing what we think about GERS.
The short version of that blog is that we should take the figures seriously if we want to convince No Voters to vote for independence. We said that in the full knowledge of the fact that GERS doesn’t tell us much about the finances of an independent Scotland.
Since we published the blog, the 2017 GERS figures have been released and those figures suggest that the Scottish fiscal balance within the UK is moving in the right direction.
The headline figure that each side of the indy debate looks to is the Net Fiscal Balance.
This is described as the difference between total revenue and total public sector expenditure including capital investment.
- For 2015-16 this figure including an illustrative geographic share of North Sea revenue was a deficit of £14.8 billion (9.5 per cent of GDP).
- For 2016-2017 the deficit fell to £13.3 billion (8.3 per cent of GDP).
- So the actual figure has fallen by £1.5 billion, or just under 13 percent in one year.
In the context of GERS, we can see that the Scottish deficit within the UK was at a manageable level until the 2008 crash. Scotland then began to recover at the same rate as the rest of the UK until we were hit by the oil price crash in 2011.
According to this years report, Scotland generated 8 percent of UK GDP but our population share of UK expenditure was 9.2 percent. Yet, as we have discussed before, if you look back over a longer period, Scottish oil wealth has actually subsidised the UK in the longer term.
Anyway, that is a brief snapshot of this years GERS figures. I’m going to take my own advice and take GERS seriously, so we should cautiously welcome the news that we are moving in the right direction.
Check out our earlier blog where we argue that despite its problems we should embrace GERS. We also point to some ideas as to how an independent Scotland could quickly achieve a healthy fiscal balance if we needed to.
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