Coronavirus Crisis

Pandemic will show folly of breaking up Britain, warns top academic

THE coronavirus crisis will make the economic case for an independent Scotland even weaker, according to a leading academic.

Professor Jim Gallagher predicted that the deficit an independent Scotland would face will increase when official figures are published later this week.

He said the data, which shows how much more is spent on public services in Scotland than is raised in taxation, will ‘spell out the economic folly of independence’.

The Government Expenditure and Revenue Scotland (GERS) figures, to be published on Wednesday, will show the state of public finances in the 2019/20 financial year.

Writing in the Sunday Times, Professor Gallagher, a former UK Government directorgeneral of devolution, said the figures would only just be touched by the coronavirus pandemic but will still be weaker than the previous year. He added: ‘Nationalists will be in denial but brutal tax and spend figures added to the financial effects of the coronavirus crisis will spell out the economic folly of independence.’

The figures are published by the Scottish Government and set out how all money is spent and raised in the country.

Last year’s figures showed that public spending per head was £1,661 higher in Scotland than across the UK in 2018/19, with the gap growing substantially. Scots also contributed £307 less per person towards government income – meaning the overall ‘Union dividend’ is worth nearly £2,000 a year to every man, woman and child.

Professor Gallagher says the GERS data shows Scotland’s fiscal balance now but also the income and spending commitments that an independent country would inherit.

He said: ‘Today it matters more than ever in determining how much Scotland could afford to support an economy in crisis. The latest figures are for 2019-20, only just touched by coronavirus, but will still look worse than the year before.

‘Oil revenues have fallen again, to about a tenth of the Scottish Government’s 2014 predictions for the “first year of independence”. Income tax has grown less than in the rest of the UK, reflecting the continuing relative decline in the Scottish economy for more than ten years now and the Scottish Government’s tax decisions. There are fewer well-paid jobs and less income tax than predicted.

‘Scotland’s already large deficit worsened last year, probably to more than 8 per cent of GDP, versus less than 2 per cent for the UK. This structural difference has been seen for some years.’

He added: ‘For the SNP in 2014, oil was to save the day. More recently, the party’s fiscal commission planned to keep on borrowing until something turned up. These are just different fiscal fantasies, denying the reality: independence would carry a painful price in jobs and public services.

‘The hard truths can’t just be waved away with fantasy fiscal policies. The future of our economy, whether people have jobs after the crisis, depends on governments’ capacity to borrow and invest. This week, GERS matters.’

Former Labour trade minister Brian Wilson, a new member of the advisory council of Scottish Business UK, said: ‘While the Scottish Government works tirelessly to emphasise the difference between Scotland and the rest of the UK, it is vital to remind ourselves of the inter-dependence that exists and its value, both social and economic, to Scotland.

‘None of the arguments which prevailed in 2014 have gone away and it is important they are updated and communicated effectively. The field should not be left clear for those whose sole mission is to create division around a single political objective, regardless of consequences.’

At the weekend, European Commission executive vice-president Frans Timmermans cast doubt on claims that Scotland could join the EU quickly and easily after inde

‘Fewer well-paid jobs than predicted’

pendence. Speaking in a virtual Edinburgh International Book Festival event hosted by Gordon Brown, he said it would not be easy for an independent Scotland to become an EU member.

He added: ‘You need the agreement of all member states for this to happen, and some member states have very strong reservations vis-à-vis certain forms of independence. I would not be overly optimistic.’

Pamela Nash, chief executive of Scotland in Union, said: ‘It’s time for honesty from the SNP. The constitutional debate must not be about people’s views on how Nicola Sturgeon or Boris Johnson have handled the crisis; it should be about what leaving the UK would mean for Scotland’s future.’

A spokesman for SNP Finance Secretary Kate Forbes said: ‘Unlike most countries large and small, we don’t have the full economic powers to [tackle the pandemic].’

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