Scotland’s £11bn deficit ‘could be tackled by cuts’

Scotland faces an £11 billion budget deficit in the year of a potential Yes vote, according to a political economist.

The Scottish Futures research, which was updated following Nicola Sturgeon’s fresh call for a referendum, predicts the financial outlook for 2019-20 will have worsened since the previous poll. It found the difference between public spending and revenue, fuelled by the oil price slump, would be the equivalent of £1,700 per person in Scotland.

John McLaren, the Glasgow public policy professor who led the research, said there are ways an independent Scotland could address the deficit to achieve “equilibrium”, but said “none of these are easy or without consequences”.

He suggested raising income tax and reducing VAT exemptions, as well as a new levy on whisky.

Spending could be rowed back in areas such as defence and economic development, he added.

Mr McLaren said the implications of both Brexit and independence are “highly uncertain”, but while leaving the EU will provide an initial lift to the UK’s fiscal position, independence “will result in Scotland experiencing a worsening of its position”.

He said despite “seemingly negative movements in the economic and fiscal position” of a Scotland outside the UK, the Yes side could win because of the EU factor, the prospect of a Tory-led UK Government for the foreseeable future and the electorate’s attitude to economic experts.

A Scottish Government spokesman said: “The implied deficit for Scotland reflects the existing UK economic model and assumes a future Scottish Government would continue with the same policy choices or expenditure plans, such as Trident.”