Sturgeon was 'largely protected by UK' after plunging oil revenues devastated Scotland

5 mins read

The Scottish First Minister is in the final stretch before this week’s Holyrood elections. She is hoping to secure a majority with her Scottish National Party (SNP) which she argues will give her the mandate to call a second independence referendum. However, in recent weeks Ms Sturgeon has veered away from suggesting an Indyref2 would be held this year.

She has instead said Scotland must focus on recovering from the fallout of the coronavirus pandemic.

Many have questioned how viable an independent Scotland is.

Critics say the country would not be able to rely on its historically lucrative oil and gas revenues, both of which have become integral to Scotland’s economy.

This is not only because of a gradual switch to renewables, but also a result of previous plunging revenues.

In 2016, a report by the Institute for Fiscal Studies (IFS) revealed how Scotland, if it had achieved independence in 2014, would have faced the challenge of tax hikes or spending cuts to fill a £10billion-plus black hole.

This came after the drop in the cost of crude oil of $115 (£82) a barrel in the months leading up to the 2014 referendum meant that while the UK as a whole would be back in surplus by the end of the decade, Scotland’s budget deficit would remain at more than six percent of national income.

Vitally, it said Scotland was largely “insulated” from the impact of falling oil revenues because it was a part of the UK.

It added: “Figures on the Scottish deficit would be much more important if it became fully responsible for managing its own public finances.

JUST INAshford explosion: Homes evacuated as front of house blown off in horr

Between 2019-20, the country’s share of North Sea oil and gas tax receipts again fell by around half to £724million, according to tax and spending figures.

The data, published in the Government Expenditure and Revenue Scotland (GERS) report for 2019-20, showed the country’s net fiscal balance, including North Sea revenues, was in the red by £15.1billion, 8.6 percent of gross domestic product (GDP), compared to a shortfall of £13.2bn in 2018-19.

This was compared to a total UK deficit of 2.5 percent of GDP.

Despite this, proponents of independence say the country would find revenue in other areas.

Alex Salmond, the former Scottish First Minister and current Alba Party leader, previously claimed Scotland would be able to raise £250million a year more in tax without tax hikes.

He said this would be done by revamping the country’s archaic taxation system, making it harder for people to tax evade and commit fraud.

Ms Sturgeon also has EU membership in her sights which would offer an avenue for external income.

She has suggested Brussels would welcome Scotland with “open arms”.

In January, she wrote on the SNP’s website: “As an independent member of the EU, Scotland would be a partner and a bridge-builder.

“We hope to see you again soon.”

Yet, a recent study carried out by economists at the London School of Economics (LSE) found the fallout from independence could not be reversed by rejoining the EU.

Trade costs would soar an estimated 30 percent between Scotland and the UK.

This would be a devastating blow for north of the border which exported £51.2billion in goods and services to the rest of the UK in 2018, as Britain might choose to buy elsewhere if prices hike.

Leave a Reply

Your email address will not be published.

Previous Story

McDonald’s customer left fuming as McMuffin arrives with NOTHING inside

Next Story

Realme X7 Max Retail Box Leak Tips 120Hz Super AMOLED Display

Latest from Blog