‘Bill for exit would be £1,000 per person’
NICOLA STURGEON’S economic case for independence suffered a major blow after one of Britain’s most respected economists warned taxes would have to rise or spending fall by more than £1,000 per person.
Paul Johnson, the director of the Institute for Fiscal Studies, also warned that a separate Scotland was likely to face political pressure to adopt the euro as the price of EU membership.
Despite the First Minister’s claims, he warned that Scotland faces trade barriers with England if it is inside the EU single market and the rest of the UK is outside.
Mr Johnson gave the warning only hours after Ms Sturgeon promised an “informed” debate. However, she refused to provide specific answers on the currency or closing the mammoth deficit.
The Scottish Government’s most recent figures showed Scotland has an annual public spending deficit of £15 billion, or 9.5 per cent of GDP, proportionally even higher than Greece’s. There is a net transfer of around £9 billion a year from the rest of the UK to Scotland. Mr Johnson said public spending was more than £1,000 higher per person in Scotland than in the rest of the UK, despite tax revenue being similar, and the oil price collapse had weakened the nationalists’ economic case since 2014.
Mr Johnson told BBC Radio 4 that Scotland would have a “significant fiscal problem going forward”.
Ms Sturgeon has set up a commission to examine how the deficit could be closed and which currency a separate Scotland should adopt. The UK Government rejected the plan for a sterling currency union in the 2014 referendum.
Mr Johnson said: “It would clearly be more difficult to maintain the pound if the UK was outside the EU and Scotland was inside and the pressure on Scotland politically from the rest of the EU to join the euro would be significant. But in the end that would be a political, as much as an economic, choice.”
The economist said Ms Sturgeon’s plan to stay in the single market would help Scottish firms gain access to European markets “but potentially hinders it very badly in terms of its access to the UK market”.