Scotland had a deficit of £14.9 billion — 9.7 per% of gross domestic product (GDP) — in the financial year 2014-15, compared to a deficit for the UK of £89.1 billion, about 4.9% of UK GDP, the Scottish Government said.
The slump offshore in North Sea oil and gas revenue amid sustained low oil prices continues to drag on the Scottish economy.
But First Minister Nicola Sturgeon maintained that “the foundations of Scotland’s economy are strong” pointing to new figures showing onshore revenue has grown by more than £6 billion over the last five years.
The Government Expenditure and Revenue Scotland 2014-15 (GERS) published on Wednesday showed Scotland’s estimated onshore revenue grew by 3.2% in 2014-15 to £51.6 billion, up £6.1 billion from £45.5 billion in 2010-11.
Including North Sea revenue, total public sector revenue in Scotland was estimated at £53.4 billion — 8.2% of UK public sector revenue — representing £10,000 per person, very slightly below the UK average.
Total expenditure “for the benefit of Scotland by the Scottish Government, UK Government, and all other parts of the public sector” was £68.4 billion — 9.3% of total UK public sector expenditure — representing £12,800 per person, £1,400 more than the UK average.
“The annual GERS publication shows our onshore economy is doing well, with estimated onshore revenue growing by 3.2% and tax receipts broadly comparable to the rest of the UK,” said Sturgeon.
“Taken in the context of the wider economic environment, which has been impacted by muted global demand, falling oil prices and more difficult conditions for manufacturers, the economy has remained resilient with record levels of employment, positive economic growth and growing exports.
“This shows the foundations of Scotland’s economy are strong and that we have a strong base to build our future progress upon.
“These GERS figures show our strategic priority of investing in economic growth – with spending per head on economic development in Scotland more than twice the UK average.
“However — despite the fact the onshore economy accounts for more than 90% of Scotland’s output — Scotland is clearly not immune to the problems being felt by the oil industry internationally.
“Although it is important to bear in mind that these are figures from just one year, and while we are doing what we can to mitigate these problems, this needs immediate action from the UK Government.”
Deputy First Minister John Swinney urged the UK Government to cut tax to help make the North Sea more competitive.
“In next week’s UK Budget, I urge the Chancellor to take bold steps,” said Swinney.
“Immediate action is needed to support the industry and make the North Sea more internationally competitive — primarily by a substantial reduction in the headline rate of tax.
“I am also urging the Chancellor to remove fiscal barriers for exploration and enhanced oil recovery, to implement fiscal reforms to improve access to decommissioning tax relief and encourage late life asset transfers, and urgently consider additional non-fiscal support — such as government loan guarantees — to sustain investment in the sector.
“The North Sea needs urgent help from the UK Government, both for the sake of the industry and the wider economy.”