Wednesday 23 June 2010

Deficit? What deficit?

You've got to admit that this is most interesting:
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.

I'd like to have a closer look at the assumptions made here but I wouldn't be too surprised to find that the report is more-or-less correct. I've always believed that the Southeast of England gains tremendously from the jobs and money generated there by the UK's uniquely centralised state and once that's taken into account the finances of Scotland become considerably better than they are often portrayed.

That's not to say that Scotland doesn't need a smaller state. Of course it does. And as a libertarian I want to see at least 90% of government expenditure eliminated. High state spending is not a good thing in itself. And the main aim must be to eliminate the welfare dependency that's so harmful to places like Glasgow.

Sadly that's not exactly the SNP view:

This year’s general election showed up a serious ideological difference between the SNP and the other major parties. We were the only ones who went into it opposing the agenda of swingeing cuts in public spending.
The SNP lost my vote at the general election because of their love of high taxation and nanny-statism. An independent Scotland should aim to be richer than Switzerland. Big government won't deliver that.

1 comment:

David Farrer said...

Comments made on previous template:

David Farrer
If I'd been Chancellor of an independent Scotland there wouldn't have been any guarantee to the banks...

25 June 2010, 18:42:52 GMT+01:00
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The Hypochondriack
It is difficult to take official information from the government seriously. Scotland: large financial sector, large public sector, still in the black?  It all sounds a bit unlikely, although I am not an economist.  
I notice the quotation says "includes a share of the UK Government's Financial Sector Interventions to support the banking sector" (my emboldening), which tends to support the unioinst narrative that Scotland gains a measure of protection from being in the UK, as it is unlikely that an independent Scotland would have coped particuarly well with its two biggest banks going A over T.  No doubt someone could dispute this.

24 June 2010, 17:06:37 GMT+01:00
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Ross Taylor
I agree chief. 
There are a million and one pies with politicians fingers in. Why do we support the Opera, Tennis etc. Why do we even have an army??

24 June 2010, 16:34:34 GMT+01:00