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10 Apr 2014 03:34pm

Deficit to rocket for independent Scotland

An independent Scotland in its first year would have the second highest fiscal deficit of all advanced economies

According to analysis from the Treasury, based on IMF figures, Scotland is forecast to a fiscal deficit of 5.5% in 2016/17, equivalent to £9.5bn, or £1,760 per head. This means only the US would have a larger fiscal deficit than an independent Scotland in 2016.

This would be around £1,000 greater than the UK’s deficit per head.

As the date of this year's Scottish referendum moves nearer, pressure is mounting on both sides to prove that they offer the best financial advantages for Scotland’s future. The Scottish government has argued it will have stronger finances than the rest of the UK after independence, as it is expecting to inherit most of Britain’s North Sea oil and gas.

Chief secretary to the Treasury Danny Alexander, said the majority of analysis shows “that the broad shoulders of the UK mean lower tax bills and higher spending on public services in Scotland.”

“All these reports confirm that both the UK and Scotland would be worse off apart. Being part of the larger UK economy provides Scotland with jobs, stability and security. Independence would mean higher taxes and lower spending on public services."

The Treasury argue the Scottish government’s own estimates understate the likely size of the deficit in the first year of independence by over 2 percentage points of GDP.

Raymond Doherty

 

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