Why should it be only Scotland that is not allowed to run a deficit?

WHY do Unionist politicians and some sections of the media insist on referring to a possible fiscal deficit in Scotland’s finances due to the current fall in oil prices as a “black hole”, with all the threat of permanent doom and disaster that this implies (£1bn black hole in council funding will hit services”, The Herald, June 15)? A fiscal deficit is not an economic catastrophe – it is simply a government incurring more expenditure than it collects in revenue from taxation and other sources in one year. In the current global financial situation, almost every developed country in the western world is running up annual deficits, and some have done so for many years.

In the UK the Labour government incurred a fiscal deficit almost every year from 1997 onwards, soaring to almost £200 billion after the 2008 banking and global financial collapse. When he became Chancellor, George Osborne promised to eliminate the deficit within five years, but by the end of the financial year 2014/15 he had only managed to halve the annual figure to around £96 billion. Why have the politicians and media never described these UK annual deficits as a black hole from which there is no chance of escaping?

How has the UK managed to survive and cover the cumulative effect of spending more than they can afford over several years? By national borrowing on a massive scale, of course. What do we think all these government bonds and stocks listed every day in the financial pages are for? The private investor may regard these as a safe investment to provide guaranteed annual income, but in effect they represent long-term borrowing by the Government at relatively low rates of interest to cover the fiscal shortfall each year. And in the UK that national borrowing has now soared to more than £1.5 trillion, with the interest adding millions to the fiscal deficit every single week.

Yet we are constantly told that a deficit of between £7.6bn and £12bn in Scotland’s total budget due to reduced oil revenues would devastate our economy, and have to be covered by massive increases in taxation and/ or cuts in public services. Would a Scotland either fully independent or with complete fiscal autonomy not be allowed to borrow to cover annual fiscal deficits, as the UK does? Many other countries of similar size, without the benefit of any oil resources and with far fewer wellestablished and successful industries, seem to manage to survive pretty well. So why would Scotland alone be doomed to disappear down an economic black hole? Iain D Mann, 7 Kelvin Court, Glasgow.