Scotland’s Public Spending Exceeds UK Average, Yet Deficit Grows

Scotland continues to receive higher spending on public services compared to other regions of the United Kingdom, according to the latest Government Expenditure and Revenue (GERS) figures for the fiscal year 2024-25. The report indicates that Scots benefit from an additional £2,669 per person in public spending compared to the UK average, highlighting the financial support available through the UK’s fiscal structure.

Despite this apparent advantage, the GERS report also cautions that Scotland’s public finances are weakening, with expenditures increasing at a faster rate than revenues. The annual assessment, published by economists at the Scottish Government every August, aims to enhance public understanding of Scotland’s fiscal situation.

Financial Context and Implications

In the previous year, Scotland generated £91.4 billion in tax receipts through both devolved and reserved taxation, while public spending reached £117.6 billion. This spending equates to approximately eight percent of the UK’s total revenue and nine percent of its overall spending. The figures reveal a growing notional deficit of around £26.5 billion, representing 11.7 percent of Scotland’s GDP. This deficit is more than double the UK’s overall figure of 5.1 percent, reflecting a £5.1 billion increase compared to the previous year.

Ian Murray, the Scottish Secretary, commented on the report, asserting that the data demonstrates the benefits of Scotland’s relationship within the UK. He stated, “These figures underline the collective economic strength of the United Kingdom and how Scotland benefits from the redistribution of wealth inside the UK.” He emphasized that this financial support allows for better funding of essential services, including schools and hospitals, and warned that the Scottish National Party’s (SNP) push for full fiscal autonomy would lead to “turbo-charged austerity.”

Conversely, Shona Robison, the SNP Finance Secretary, argued that decisions made by the Scottish Government are fostering sustainable public finances. She stated, “For the fourth year in a row, devolved revenues have grown faster than devolved expenditure.” Robison highlighted that Scotland ranks third in the UK for revenue per person, trailing only London and the South East.

Challenges Ahead

The report also notes significant challenges that may impact Scotland’s revenue. Robison pointed to the financial fallout from Brexit, indicating that leaving the European Union has cost Scotland approximately £2.3 billion in lost revenue. Additionally, the rising cost of UK Government debt has added £500 million to the deficit.

Falling oil prices and a decrease in extraction levels are further complicating the nation’s financial outlook. Robison reaffirmed the SNP’s commitment to a just transition for Scotland’s oil and gas sector, aligning economic strategies with climate change commitments and energy security goals.

The GERS report serves as a pivotal document in the ongoing debate over Scotland’s financial future and its place within the United Kingdom. Both the SNP and pro-UK supporters utilize the data to bolster their respective arguments regarding Scotland’s economic viability and governance. As Scotland navigates these fiscal challenges, the implications of these figures will likely continue to shape discussions about its future governance and economic direction.