THE UK does not have a “positive financial outlook ahead”, the Deputy First Minister said, as he hailed the “formidable” growth in revenue as Scotland bounces back from the impact of the pandemic.
SNP MSP John Swinney, who is standing in for Finance Secretary Kate Forbes while she is on maternity leave, made the comments as the annual Government Expenditure Revenue Scotland (GERS) report was released.
Speaking at a press conference in Edinburgh, Swinney said that with the UK running one of the largest deficits in Europe and the ongoing impact of Brexit, an independent Scotland would be a more attractive offer to voters.
The 2021/22 GERS showed a major decrease in Scotland’s deficit, the difference between the amount raised through taxes and other means, compared to the amount spent on public services.
The acting finance secretary said the growth in revenue in Scotland has “been formidable, which is a secure and significant reduction in the notional deficit”.
It comes as the Scottish Conservatives claimed the figures show the “Union dividend” has grown to record levels.
The party calculate the figure by combining the value of Scotland’s higher spending and lower revenue compared to the UK as a whole, reached £12 billion last year. According to the Tories, this equals £2184 per person.
Liz Smith, Scottish Tory shadow finance secretary, said the figures show it was “wrong” to push ahead with indyref2.
She said: “The strength and stability of the Union helped us to weather the pandemic, saving thousands of jobs, livelihoods and businesses that would otherwise have been lost – but we are not out of the woods.
“As we head into a global cost-of-living crisis, it is more important than ever that both of Scotland’s governments are 100% focused on our recovery."
Asked why Scots would choose independence when they supposedly benefit more from the Union than other devolved nations, Swinney said that voters would look at the prospects of remaining in the Union or going it alone.
He added: “I think anyone looking at the economic outlook for the United Kingdom, and given the recent Bank of England's forecasts and data, given the fact that the UK is running one of the largest deficits in Europe, given that the post-Brexit economic implications for the United Kingdom, having an involuntary impact of that on Scotland.
“I think people will see that the economic prospects in the United Kingdom are not positive in the future. And as a consequence, people can look to what an independent Scotland improving its public finances in the devolved context to utilise the fiscal responsibilities and flexibilities available to us to create the type of prosperity that we in Scotland want to see.”
As part of the annual statistical release, Scotland is allocated a share of the UK Government’s overall debt and a percentage of reserved spending on areas like defence.
Pro-independence supporters have repeatedly criticised the report as they say the figures are misleading and do not show the realities of how Scotland would survive financially.
GERS 21/22 is published this morning. It shows that Scotland’s fiscal position is recovering faster than the UK’s – a huge fall in the annual deficit thanks to the largest increase in revenues on record.🧵 [1/8]
— John Swinney (@JohnSwinney) August 24, 2022
There have been calls for GERS to be scrapped, or for a complimentary report, dubbed an alternative GERS, setting out what an independent Scotland’s finances could be like, to be published.
Asked if the Scottish Government, as it prepares a series of whitepapers ahead of indyref2, will set out a deficit reduction plan or alternative GERS in the coming months, Swinney said: “Every country has got to run sustainable public finances and of course, as an independent country would have available to it a much wider range of fiscal flexibilities than we currently have within the arrangements for devolution, which are largely covered by this document.
“So the prospectus has got to look at the exercise of that wide range of responsibilities which is much wider than where we are today, which provides the opportunities to stimulate growth to borrow to invest in a fashion that we can't currently do, and to ensure that we run sustainable public finances.
“Now I would put the context around this, which is that most countries and certainly most countries in Western Europe, are running significant budgetary deficits on the basis of the aftermath of Covid.”
Pressed on if the Government will set this out ahead of the next referendum, Swinney added: “Obviously the Government believes in independence, which is why we will set out the basis of what the various levers and flexibilities that an independent Scotland would have at our disposal and could exercise to improve performance.”
