Scotland's Deficit Twice Size of UK's in Wake of Oil Crisis
10.03.2016

Scotland's Deficit Twice Size of UK's in Wake of Oil Crisis

Scotland's Deficit Twice Size of UK's in Wake of Oil Crisis

Scotland’s national deficit has grown to twice the size of the UK’s in the wake of the oil crisis, new figures show.

Despite the Scottish Government’s prediction that the price of oil would remain above $100 a barrel, its value has plunged to less than $40 over the last year.

As a result, Scotland’s deficit including North Sea revenues has grown to £14.9bn (9.7% of GDP), while the UK’s is around £89.4bn (4.9%).

Previous figures showed the Scottish deficit only 2.5% higher than the UK's at 8.1% compared to 5.6%.

Scotland is benefiting from £1400 more spending per person compared to the rest of the UK, according to the Government Expenditure and Revenue Scotland (Gers) report for 2014/15.

The Scottish Conservatives said the report "reinforces the benefits of being part of the UK", while the Liberal Democrats claimed the First Minister’s economic credibility had been "smashed to smithereens".

Scottish Conservative finance spokesman Murdo Fraser said: "The bottom line is that in good times and bad, Scotland, England, Wales and Northern Ireland are better off in one union, facing global challenges together.

"Figures for individual years will differ but that central fact doesn't change. These figures today illustrate the impact of the falling oil price on Scotland's balance sheet.

"They also shed new light on the SNP's deception before the referendum.

"During that referendum debate, the SNP was warned repeatedly by us that they were over-estimating the future value of oil.

"But instead, Nicola Sturgeon and others cited the good years to claim we would all be £500 better off and wilfully ignored the bad years because it didn't fit with their plan."

Scottish Labour leader Kezia Dugdale added: "These figures from the SNP government show once and for all the devastating impact leaving the UK would have had on Scotland's finances.

"The fact that the cuts that would have been needed after separation would have been five times more than those being imposed now by George Osborne gives a sense of the impact on our schools and hospitals. People were misled by the SNP in the run-up to the referendum and that is unforgivable."

The First Minister insisted Scotland's economy is strong and highlighted that onshore revenue excluding the North Sea has grown by more than £6bn over the last five years.

Ms Sturgeon said: "The annual Gers publication shows our onshore economy is doing well, with estimated onshore revenue growing by 3.2% and tax receipts broadly comparable to the rest of the UK.

"Taken in the context of the wider economic environment, which has been impacted by muted global demand, falling oil prices and more difficult conditions for manufacturers, the economy has remained resilient with record levels of employment, positive economic growth and growing exports.

"This shows the foundations of Scotland’s economy are strong and that we have a strong base to build our future progress upon.

"These Gers figures show our strategic priority of investing in economic growth, with spending per head on economic development in Scotland more than twice the UK average.

"However, despite the fact the onshore economy accounts for more than 90% of Scotland’s output, Scotland is clearly not immune to the problems being felt by the oil industry internationally.

"Although it is important to bear in mind that these are figures from just one year, and while we are doing what we can to mitigate these problems, this needs immediate action from the UK Government."

The UK Government made a loss from North Sea taxes during the last six months of 2015 for the first time in decades and tax revenues fell by more than 50%.

The cost of extracting a barrel of oil in the UK has fallen to around $21 but nearly half of North Sea fields will run at a loss in 2016 if the price stays low, according to Oil and Gas UK.

Any further turmoil could lead to Scotland’s deficit growing further and industry leaders have called on the UK Government to introduce urgent tax reforms to make the North Sea more profitable.

Source: stv.tv

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