Wry & Dry

Scotland's deficit: worse than Greece

There are many things about Scotland that W&D enjoys.  For example, there is a liquor produced there of disarming properties.  And Adam Smith, one the world's greatest economists, was a Scot.

W&D has always viewed the Scots as canny folk.  So W&D is at a loss to explain why the Scots would want to be independent from the rest of the UK.  The fact is that Scotland has been sucking on the fiscal teat of England for years.  And it's getting worse.

An independent Scotland would be an economic disaster for the Scots.  

On the latest data, Scotland has a government deficit of 9.5% of GDP, which is twice the rate of the rest of the UK and worse than every country in the EU.  And that includes Greece (7.2%)!

Scotland's economic independence rests almost solely on the price and volume of oil (North Sea oil is pumped offshore from Scotland).  

Problemo: Not only is the price of oil falling, but also the North Sea oil fields are drying up.

North Sea oilNorth Sea oil - forecast production

Scotland is being kept afloat by the taxes from the rest of the UK.  Or more specifically, the area around London.  This movement of government funds from one part of an economy to another is called a 'fiscal transfer'.  

It's not quite as bad as the fiscal transfers that go the way of Tasmania.  However, the Taswegians seems smart enough not to want to declare independence from the rest of Australia.  Although, get Jacqui Lambie into state politics...

It's a fact that Scotland would be unviable as an independent nation.  Even the Scottish Nationalist Party's former head of policy, Alex Bell, admitted earlier this week that the economic document the SNP relied on to argue its case for independence three years ago (White Paper on Independence) was 'drivel' and that its authors should apologise as it didn't make sense.  

But somehow, Nicola Sturgeon, Scotland's First Minister, saw it differently this week.  "Scotland is not being subsidised by the rest of the UK."

She also believes in the Loch Ness Monster.