Now Financial Times says massive tax rise is price of independence

AN independent Scotland would have to raise taxes or cut public spending each year by around £1,800 per person to balance the books, according to research.

Economists say Scotland would face a hole in its public finances equivalent to 10 per cent of GDP if it decides to leave.

Lower than expected tax revenues, Brexit and the coronavirus crisis have all been blamed for a soaring deficit.

While the analysis, published yesterday in the Financial Times, concludes that Scotland could ‘afford to leave the UK’, the Scottish Government would be forced to consider imposing ‘many years of spending restraint or higher taxes’.

The only alternative, it suggests, would be to gamble that ‘financial markets would be willing to lend at very low interest rates to a new sovereign borrower with a large and persistent deficit.’

Scottish Tory leader Douglas Ross said: ‘Scots would face extreme tax rises and brutal cuts to public services. This report should serve as a reality check but Nationalists simply ignore basic economic truths.’

Neil Shearing, economist at consultancy Capital Economics, said an independent Scotland would need ‘a large

‘Nationalists simply ignore basic economic truths’

fiscal adjustment and its government would have to communicate its intentions in a clear and credible way to markets’.

The FT found that few economists thought an advanced economy of Scotland’s size would be ‘unviable on a standalone basis’, but they cautioned there would be ‘a difficult transition to stable public finances’.

This would mean Scotland would have to raise taxes or cut public spending annually by the equivalent of £1,765 per person after exiting the UK so as to narrow the deficit to sustainable levels.

Since the 2014 referendum, the price of oil has plummeted and tax revenues have never recovered.

Scotland received £1,633 per person more in public spending than the UK average in 2019-20, according to the latest figures.

The country also generated £308 less in tax revenue per person than the UK average even if a geographic share of North Sea oil revenues is included.

A spokesman for the SNP said: ‘The whole point of independence is to give the Scottish parliament all the economic levers it needs to grow our economy and to make the public spending choices best suited to Scotland’s interests.’