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New GERS data fundamentally makes the case for Scottish independence

The annual GERS report is out again.

GERS is the UK Government Expenditure and Revenue Report for Scotland. Scotland’s overall budget is set by Westminster. 70% of its revenues are controlled by Westminster and 40% of its spending.

Much of that spending doesn’t ever reach Scotland but is spent elsewhere in the UK. That fact, despite record revenues announced in this year’s GERS report of £65.9 billion, is why GERS suggests Scotland has an increasing deficit. The UK Government declares billions of spending outside of Scotland as “on Scotland’s behalf” and adds them to Scotland’s accounts. We have written a report on that called The accounting trick that hides Scotland wealth and we will update those figures soon.

So to be clear, GERS paints a picture of Scotland’s economy as a result of that economy largely being controlled by Westminster. It does not tell us how an independent Scotland would perform, as in that case, the Scottish Government would have the power to make very different fiscal and monetary choices.

So, what does GERS tell us about the UK’s management of Scotland’s prosperity? Well, it provides indisputable proof that Scotland could be significantly wealthier if it were an independent nation.

You see there is a question that everyone in Scotland needs to ask about GERS:

If being a part of the UK offered Scotland some form of economic advantage, how come the GDP figures used in GERS suggest that being part of the UK damages Scotland’s economy?

Scotland possesses natural wealth unequalled by any other small northern European country, none of which have the supposed advantage of having their economies run by Westminster.

Let’s look at the headline GDP figures from GERS and benchmark those against independent Northern European nations closest in size to Scotland.

 

Those nations have far lower levels of natural wealth than Scotland. Even Norway, which has produced almost the same amount of oil as Scotland, is not as naturally wealthy overall. Unlike Scotland, Norway does not have whisky exports of £25 per second, Scotland’s reputation for quality food and drink, and it is not the home of golf or of the world’s largest cultural festival that helps drive our tourism industry.

So, you might reasonably assume that “if being part of the UK were such an advantage, Scotland would have a stronger economy than all of those smaller independent nations who have less economic potential, even Norway?

Well, in a damning indictment of Westminster’s economic management, that is not the case.

 

Without Scotland’s advantages, those nations’ economies outperform Scotland overall and also the UK on a per head basis.  It is clear that Scotland being an economic region of the UK is what is holding Scotland back from reaching that economic potential.

Now, I assume you know all about Norway’s $1 trillion sovereign oil fund, whilst the far larger UK is £2 trillion in debt. I will let the former PM David Cameron explain that one to you. He said Norway is doing much better than the UK economically because Norway “has only four million people, not sixty million and it has exactly the same amount of oil as us” Youtube Link

So what about Ireland? How did that happen?

Ireland, which has 600,000 fewer people than Scotland and very few of Scotland’s economic advantages, has an economy more than one and a half times the size of Scotland’s. How does that make you feel? Are you surprised? I think you should be angry. Angry with Scotland for allowing this to happen and at Westminster’s economic mismanagement.

Ireland’s economy has turned out to be more far more resilient after the 2008 financial crash and its economic growth over the 12 years since the crash has significantly outperformed the UK’s by almost 4 times.

Conclusions

There is no set of accounts that tells us how an independent Scotland’s economy would fair, nor what its finances would look like.

GERS simply tells us how much the UK is costing Scotland in terms of lost economic opportunity and lost wellbeing for its people. This is particularly evident when we compare the figures to smaller independent nations that would love to have Scotland’s economic advantages and natural wealth.

Scotland’s economy, when benchmarked against similar sized independent nations paints a vivid but miserable picture of the impact of Westminster’s continued economic mismanagement.

Smaller more flexible independent nations invariably outperform the lumbering UK, and Scotland as part of the UK suffers from that lost opportunity.

Scotland’s chance to become a wealthier nation sits with independence and not with staying tied to the self-destructing UK economy, and a Brexit that we didn’t vote for.

About the author

Gordon MacIntyre-Kemp

Gordon MacIntyre-Kemp is the Founder and Chief Executive of Business for Scotland. Before becoming CEO of Business for Scotland Gordon ran a business strategy and social media, sales & marketing consultancy.

With a degree in business, marketing and economics, Gordon has worked as an economic development planning professional, and in marketing roles specialising in pricing modelling and promotional evaluation for global companies (including P&G).

Gordon benefits (not suffers) from dyslexia, and is a proponent of the emerging New Economics School. Gordon contributes articles to Business for Scotland, The National and Believe in Scotland.

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