There is a lot of anti-Indy talk about a “£15 billion black hole”, and the EU with its 3% of GDP so called requirement, so let’s first take a look at what the EU actually requires. What the SGP (Stability and Growth Pact) actually wants is 3% deficit, or a satisfactory member state plan to reduce to that – which is called a Medium-Term Budgetary Objective (MTO). For eurozone members there can be sanctions ultimately from the enforcement arm, but Scotland would NOT be a member of the eurozone. So the requirement is to have a satisfactory MTO to reduce that deficit.
The negative detractors of Independent Scotland “bang on” about oil revenues so let’s look at Scotland’s estimated net fiscal balance (including capital expenditure) over the last 7 years EXCLUDING oil revenues, i.e. its onshore fiscal deficit balance. The figures (from GERS executive summaries) are for deficit in billions, and percentage of GDP :
2009-10 – £19.9 bn – 17.8%
2010-11 – £18.6 bn – 15.6%
2011-12 – £18.2 bn – 14.6%
2012-13 – £17.6 bn – 14.0%
2013-14 – £16.4 bn – 12.2%
2014-15 – £16.7 bn – 11.9%
2015-16 – £14.9 bn – 10.1%
(Taken from GERS as at 6th Oct 2016 – they get updated but don’t seem to keep versions)
GERS 2015-16 – http://www.gov.scot/Publications/2016/08/2132
So in 6 years (end of 2010 to end of 2016), Scotland’s onshore deficit has reduced from 17.8% to 10.1% – a drop of 7.7%. It can reasonably be hoped that in another 6 years that onshore deficit can be reduced by another 7.7% to 2.4% – lower than France or the UK, and in 2 more years, to a surplus of 0.2%. Which would mean our deficit by 2022 would be well below that EU target of 3% – even if the oil price did NOT recover over the next 6 years, and Scotland got no revenue from oil at all – just like 2015-16. The EU will almost certainly regard the volatile revenues from oil as part of a cyclical deficit (or surplus), different from a structural deficit.
I somehow think the EU SGP enforcement would find that an entirely acceptable MTO – Medium-Term Budgetary Objective – for Independent Scotland within the EU. And that’s WITHOUT what the extra levers of Independence can do to help that.
And the UK has a convergence plan.
And here’s a graph of the week, whatever that means!
Currently 11 out of 28 Member States are subject to an EDP (Excessive Deficit Procedure).
. (Note: figures get updated with revised deficits and GDP, there is a time series below. The basis here is to take the figures as they stand in the reports – this may result in variations to drop in deficit and deficit as percentage of GDP from up to date figures)
Figures for GERS for previous years are updated with new figures, these can result in lower or higher deficits, or lower or higher GDP. The figures in the main article are from the executive summary for each page, the figures underneath are these figures, followed by updated figures in later years of GERS.
Year As published 2015-16 2014-15 2013-14 2012-13 2011-12
09-10 £19.9bn-17.8% 20.2-16.8% 20.0-17.2% 20.4-18.1%
10-11 £18.6bn-15.6% 20.2-16.3% 19.6-16.0% 19.8-16.1% 19.7-16.5%
11-12 £18.2bn-14.6% 18.4-14.2% 18.9-14.7% 18.5-14.5% 18.6-14.7%
12-13 £17.6bn-14.0% 19.3-14.5% 19.5-15.0% 19.5-15.1%
13-14 £16.4bn-12.2% 17.0-12.1% 17.4-12.9%
14-15 £16.7bn-11.9% 16.1-11.1%
(the figures for 09-10 published in 2010-11 are £20.1 bn – 17.9%)