Even high oil revenues can’t fix Scotland’s deficit

It’s Scotland’s annual Gers shenanigans this week. If you don’t already know, Gers stands for ‘Government Expenditure and Revenue Scotland’. It is an official Scottish government statistics report that provides an estimate of the total amount of government revenue raised in Scotland versus the total amount of public spending benefitting the country. The gap between the two highlights the notional fiscal deficit.

As the best available guide to the fundamentals a newly independent Scotland would start off with, the annual Gers updates create something of a feeding frenzy on the constitutional debate. On the build up to the 2014 referendum, the Nationalists loved the Gers numbers because they showed how Scotland’s deficit was smaller than the UK’s as a whole thanks to healthy North Sea oil and gas tax receipts. Nicola Sturgeon and Alex Salmond based their economic case for secession on the back of assuming multiple billions of pounds in oil and gas tax revenues propping up a Scottish exchequer well into the future.