Surplus finance fourth year in a row
Scotland's public finances are in a healthy position, with the country generating more income than it spends even in a period of recession, official statistics published today show. This is the fourth year in a row that Scotland has generated a current budget surplus, compared to a UK-wide deficit over the same period.
The latest Government Expenditure and Revenue Scotland (GERS) report for 2008-09 includes a share of the UK Government's Financial Sector Interventions to support the banking sector.
Even with that spending factored in, Scotland's financial position in 2008-09 was a current budget surplus of £1.3 billion, or 0.9 per cent of GDP, including a geographical share of North Sea revenues. At the same time, the UK was in current budget deficit of £48.9 billion, or 3.4 per cent of GDP, including 100 per cent of North Sea revenues.
GERS also estimates Scotland's net fiscal balance - which factors in capital and infrastructure investment for the nation's long term benefit. On this measure Scotland had a deficit of £3.8 billion or 2.6 per cent of GDP. In comparison, the UK's deficit was substantially greater, standing at £96.1 billion or 6.7 per cent of GDP.
Across the OECD as a whole, the average net fiscal balance was 3.3 per cent of GDP in 2008. In other words, GERS shows Scotland in a stronger fiscal position than the average of the major developed economies, as well as the United Kingdom.
The cumulative value of Scotland's current budget surplus over the four year period from 2005-06 to 2008-09 now stands at some £3.5 billion. Over this same period, the UK built up a deficit of £72.3 billion.
Welcoming the report, Finance Secretary John Swinney said:
"This is an extremely positive report - demonstrating beyond any doubt that Scotland is in a far stronger financial position than the UK as a whole, as well as the OECD average.
"In 2008-09, Scotland generated a current budget surplus of £1.3 billion, or 0.9 per cent of GDP, compared to a deficit for the UK of £48.9 billion, or 3.4 per cent of GDP.
"This is the fourth year in a row to record a Scottish current budget surplus - even as the UK moved into recession - and the cumulative value of Scotland's surplus since 2005-06 now stands at some £3.5 billion, compared to a UK deficit over the same period of £72.3 billion.
"These figures reinforce the case for Scotland determining its own tax and spending decisions, and managing other key economic levers, with the powers of financial responsibility and independence. That will enable us to take the decisions in Scotland needed to grow the economy, because growth is the key to moving out of the financial difficulties we face.
"As we saw in yesterday's Budget, we are left picking up the pieces of the financial mismanagement of the last Westminster Government, and the risk to recovery posed by the new UK administration.
"Yet in 2008-09, even taking into account a share of the UK's bank bail out, Scotland's own current budget balance was very substantially in credit, while the UK as a whole was in substantial deficit.
"Financial responsibility and independence provide the platform to build long-term economic prosperity and social justice in Scotland."
Comparisons with the UK public sector finances
In 2008-09, the equivalent UK current budget position, including 100 per cent of all North Sea revenue, was a deficit of £48.9 billion (or 3.4 per cent of GDP).
In 2008-09, the equivalent UK position on the net fiscal balance, including 100 per cent of all North Sea revenue, and referred to in the UK Budget 2010 Report as 'net borrowing', was a deficit of £96.1 billion (or 6.7 per cent of GDP) .
These UK figures were published in tables C3 and C4 of the March 2010 UK Budget.
Presentation of financial sector interventions in GERS 2008-09
In this edition of GERS, estimates are provided of Scotland's public sector accounts both including and not including a share of the expenditure associated with the UK Government's financial sector interventions. Estimates not including the effects of the financial interventions are presented to help highlight underlying trends in the GERS data from previous years to the latest year, 2008-09. The financial crisis has clearly been a unique event, particularly over the publication period of GERS, and therefore separating out this particular element helps provide continuity with previous GERS publications.