EU Referendum

Scotland the poor man of Europe: Huge financial deficit lays bare Nationalists’ lies

NICOLA Sturgeon was last night urged to rule out a second ­referendum for “a very long time” after Scotland’s finances were exposed as the worst in Europe.

Nicola Sturgeon
GETTY    Scotland finances are the worst in Europe

The balance sheet showed public spending almost £15billion higher than tax revenue last year, leading to a deficit of 9.7 per cent. If Scots had voted for independence, this would have left the nation in a worse position than Cyprus, Portugal, Spain, Bulgaria, Croatia and Greece.

The collapse in global oil prices was largely responsible for the fall, with opposition ­politicians saying Scots had “dodged a bullet” in voting against the SNP’s independence plans.

According to the Government Expenditure and Revenue Scotland (GERS) figures, income from taxes in 2014/15 was almost identical to the UK figure at £10,000 per person.

However, public spending was £12,800 per person compared to £11,400 across the UK as a whole, putting the so-called “Union dividend” for Scots at £1,400 each.

The SNP claimed during the referendum campaign that Scotland would have a deficit of between 1.6 per cent and 3.2 per cent by March 24, which would have been designated “Independence Day” if there had been a Yes vote.

Instead, the country’s annual shortfall now stands at 9.7 per cent of GDP – almost double the UK’s deficit as a whole.

It was the first time since devolution Scotland has failed to contribute more than the UK average in tax revenues to the Treasury’s coffers.

The First Minister tried to put a positive spin on the figures, saying  onshore tax revenues had grown by 3.2 per cent. However, even this was below the UK’s onshore growth of four per cent.

Ms Sturgeon also appeared to blame Westminster for the economic slump, saying: “While we are doing what we can to mitigate these problems, this needs immediate action from the UK Government.”

She added: “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.”

Finance Secretary John Swinney called on Chancellor George Osborne for a “substantial” tax cut for the oil and gas industry in his Budget next week.

Scotland Office minister Andrew Dunlop said the UK and Scottish governments would “continue to work hard and support the Scottish economy in difficult global conditions”. He added: “The new powers coming through the Scotland Bill will give the Scottish Government more tax and spending tools with which to boost economic growth.

“Next week’s Budget will also provide a further opportunity to help Scotland move to a high-pay, low- tax and low-welfare economy.”

Alastair Cameron, director of the Scotland in Union campaign, said: “If we had voted Yes in the referendum, Scotland would be preparing to become an independent country by the end of the month. We can see now just how challenging this would have been against a backdrop of falling oil revenue.

“As ever, Scotland is making a full contribution, and the amount of tax we raise is broadly in line with that in the rest of the UK. But the good news is that we also benefit from significantly higher spending than the rest of the UK.

“There is no doubt the low oil revenue means Scotland would be facing deep cuts or punitive tax rises right now if we were not backed by the strength of the UK.

“No matter how they voted in the referendum 18 months ago, most Scots will agree this would not be the right time for us to leave the UK.

“The First Minister Nicola Sturgeon fought tooth and nail to ensure ‘no detriment’ applied with the transfer of new tax powers. If she applies the same principle to independence, she will rule out a second referendum for a very long time.”

Scottish Liberal Democrat leader Willie Rennie said: “Nicola Sturgeon’s economic credibility has now been smashed to smithereens. These devastating figures call into question her judgment on the nation’s finances and the oil industry, two critically important responsibilities for any Scottish First Minister.

“Of course, she was wildly optimistic on her projections for income from North Sea oil. Yet her fatal error of judgment was recommending that Scotland should be independent, even though its finances would be based on such a volatile and unpredictable source of income.”

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