SNP ministers have claimed Westminster is “actively harming” the Scottish economy ahead of official figures expected to show a record deficit north of the border.
Today's Government Expenditure and Revenue Scotland (GERS) figures are forecast to show Scotland had a deficit of up to 25 per cent of GDP in the first full year of the Covid pandemic.
It means the gap between how much was raised in taxes in 2020/21 and how much was spent on public services will be almost triple what it was in 2019/20.
In April, the Institute for Fiscal Studies estimated Scotland would have a deficit of 22-25% compared to 16% for the UK in 2020/21.
The Fraser of Allander Institute yesterday estimated it would be 21% of GDP for Scotland, compared to 14% for the UK.
The main cause is the economic impact of lockdown, which cut business and personal tax revenues, and required massive public spending, with the Treasury sending Scotland £8.2bn extra last year to cope.
However Scotland has long had a larger notional deficit than the UK, and its bearing on independence means GERS is at the centre of a constitutional row each year.
In 2019/20, Scotland’s deficit was £15bn, or 8.6% of GDP, compared to 2.5% for the UK.
Until now, Scotland's biggest deficit since devolution, including a geographical share of north sea oil revenue, was 10.4% of GDP in 2009/10, after the global crash.
Stressing GERS related to Scotland’s position in the Union, not as an independent country, SNP Economy Secretary Fiona Hyslop insisted the economy was fundamentally strong.
She said: “The country is being held back by a Westminster system that treats Scotland as an afterthought at best, and which is actively undermining our economy on a range of fronts.
“Westminster is actively harming Scotland’s economy through policies like Brexit and the massive hit to our food and drink sector, where EU sales plummeted by around half in the first three months of 2021 to a 10-year low, while earlier this month it was revealed that Brexit is costing the whisky industry £5 million per week.
“And when it comes to our massive renewable energy potential, Westminster is imposing punitive transmission charges which unfairly penalise producers in Scotland.
“Opponents of independence will, as ever, try to exploit today’s GERS figures to support their arguments – the reality is very different.
“As we seek to recover from the economic crisis of the pandemic, it is more essential than ever that have independence to maximise our potential and to create a more prosperous and fairer society.”
Scotland in Union chief executive Pamela Nash said: “It’s ludicrous to claim that Scotland is being ‘held back’ when being part of the UK has safeguarded so many jobs and livelihoods over the past year.
“A separate Scotland could have taken steps to support citizens during a pandemic, but this would have been limited and at a much greater cost.
"As part of the UK we have access to a stronger safety net.
"The only people undermining Scotland’s economy are SNP politicians who are blinded by their obsession with division when they should be focused on recovery.
“The very last thing that Scotland wants or needs is another divisive referendum and the deep uncertainty this would cause at such a vital time for our country.
“Together across the UK we can use the strength of our collective economy and the pound to ensure that no community is left behind as we build a recovery for everyone.”
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