• Text size      
  • Send this article to a friend
  • Print this article

Independence and the question of oil

THE message from the SNP's conference at the weekend was loud and clear: Scotland has the resources to succeed as an independent country.

It was repeated by every Minister, in every speech. It was the first and last thing delegates heard, as Deputy First Minister Nicola Sturgeon sent them on their way with the words: "Scotland can afford to be independent and don't let anyone tell you different."

Today's report from the Centre for Public Policy for Regions (CPPR) think tank does not contradict that. What it does, however, is raise questions about just how far the finances of an independent Scotland might stretch.

Using the latest Office for Budget Responsibility oil forecasts, it predicts Scotland will plunge £11.5 billion, or 7.5% of gross domestic product, into the red this financial year.

Significantly, at least for the referendum battle, it says the deficit will be higher as a proportion of GDP than for the UK as a whole. In other words, Scotland would be worse off than the rest of Britain, albeit marginally.

The OBR's oil predictions, says the CPPR, indicate Scotland will remain worse off right through to 2017/18, the whole period of the forecasts and, even using most of the Scottish Government's own, more optimistic predictions for taxes generated by the North Sea, Scotland will lose its advantage over the UK after 2014/15.

These are all forecasts, we should remember. We will not learn for another 12 months, until the next edition of the official Government Expenditure and Revenue in Scotland (Gers) statistics are published, whether Scotland has or hasn't plunged deeper into the red than the rest of the UK this year.

The figures are important for the independence debate.

For the past four years, Scotland has been less broke than the rest of the UK. That fact – though never quite expressed in those terms – has been used repeatedly by the SNP to press the case for independence. The difference in the balance sheets north and south of the Border was the equivalent of £824 per person last year, John Swinney has said, allowing an independent Scotland to spend more, borrow less and save into an oil fund.

If the OBR's forecast for oil and economic growth prove correct, it would undermine that argument in Mr Swinney's armoury in the run-up to the referendum. It would also make it harder for the SNP to present its vision of greatly expanded free childcare, a much more generous welfare system and improved public services in an independent Scotland as anything other than a vision.

SNP ministers accuse Unionist opponents of discussing North Sea oil as if it were a burden rather than a blessing. No-one believes it is a problem, of course, but today's findings suggest it is not necessarily the panacea either.

Contextual targeting label: 
Finance

Commenting & Moderation

We moderate all comments on HeraldScotland on either a pre-moderated or post-moderated basis.
If you're a relatively new user then your comments will be reviewed before publication and if we know you well and trust you then your comments will be subject to moderation only if other users or the moderators believe you've broken the rules

Moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours. Please be patient if your posts are not approved instantly.

148307