John Ferry John Ferry

When will Nicola Sturgeon see sense on Scotland’s mounting deficit?

UK borrowing in 2020-21 hit a record level of almost £300 billion, representing 14.2 per cent of British GDP, reported the Office for National Statistics in June. In the face of the biggest spending challenge since the Second World War, the Treasury, backed by one of the world’s most established central banks, stepped up to supply all the funding needed to pay for furlough, business support and a highly successful vaccination programme.

Now imagine a prime minister in receipt of those borrowing numbers announcing that the future path for the UK is clear: we must disband the Treasury and Debt Management Office; shut down our central bank; start again from scratch with brand new institutions undertaking all those crucial things like issuing government bonds – which will henceforth be denominated in a foreign currency as the new central bank will have no monetary power.

Remarkably, that thought process mirrors the SNP Scottish government’s response to this week’s Government Expenditure and Revenue Scotland (Gers) numbers, which documents a record Scottish deficit financed by the institutional safety net of the UK.

Gers gives an official annual account of Scotland’s overall revenue raising versus government spending position. The new numbers show that Scotland’s net fiscal balance for 2020-21 was a deficit of 22.4 per cent of Scottish GDP, or £36.3 billion. Spending in Scotland shot up by 21 per cent in response to the pandemic, with total public expenditure hitting almost £100 billion. Revenues generated in Scotland were around £11,500 for every resident, while state spending was over £18,000 a head.

The numbers demonstrate clearly why Scotland is too big, too rich and too smart to venture down the road to secession. They show conclusively why Scotland’s national interest is best served by remaining part of the UK’s fiscal and monetary union.

The evidence has always been there to suggest Scotland dodged a bullet in 2014

In a reasonable world Nicola Sturgeon and her colleagues would accept this.

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