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Finance Secretary says record deficit not an 'obstacle' to independence

Finance Secretary says record deficit not an 'obstacle' to independence

Finance secretary Kate Forbes has insisted the case for independence is stronger than before, despite Scotland’s notional deficit more than doubling over the last year. 

Wednesday's publication of the Government Expenditure and Revenue Scotland (GERS) figures revealed a huge increase in public spending to combat the COVID. That led to the gap between revenue raised north of the border and money spent here jumping to £36.3billion, 22.4 per cent of GDP, up from £15.1bn, or 8.6 per cent of GDP in 2019-20. 

The SNP minister defended the spike by pointing to the increase in the UK’s deficit, up from 2.5 per cent to 14.2 per cent.

She said the GERS figures "strengthen our calls for additional fiscal and economic powers to manage our finances in a sustainable fashion, like every other advanced economy around the world will be doing.”

“We simply cannot afford not to have the powers of a normal independent country,” she added.

The SNP plan on holding a second vote on independence once the COVID crisis is over. Nicola Sturgeon has said she wants to hold the vote by the end of 2023.

Answering questions from journalists about the impact of the deficit on the case for independence, Forbes said: "The UK’s deficit right now, as a result of an unprecedented shock, is about 14 per cent, the highest in Europe.

“The fundamental difference is that we all assume the UK Government will manage that position down because of the levers at its control - partly growing the economy and partly managing its finances in a prudent and sustainable manner.

“That is what countries around the world are doing.

“So, yes, there is a strengthened argument for us to grow our economy and my position is that I can only go so far without the full levers at our control.

“I’ll again repeat, 70 per cent of taxation powers are reserved in those GERS figures, 40 per cent of spend is reserved. So right now the status quo is undefendable as far as I can see.

“That is why I believe these figures, but also the pandemic, strengthens our hand. 

“We would have been able to use these resources in a more tailored fashion.

 “Yes, the landscape has changed, but I think it’s strengthened the argument for tailored powers to ensure Scotland’s economy can grow, and we can manage the situation.”

Forbes said the deficit was “not an obstacle to making the case for independence”.

Asked if it was still the Scottish Government’s goal to hold the next independence referendum before the end of 2023, the minister said: “We have said that once the crisis is passed, we will turn our minds to independence, and that remains our position.”

Nicola Sturgeon was also pressed on the numbers during a visit to the Scottish Poetry Library following the announcement of Scotland's new Makar Kathleen Jamie.

The First Minister said: “When we see spending increases in Scotland that’s a good thing because it shows that support has been there and is being provided to people and public services across the country.

“Having a deficit is not, self-evidently, a barrier to any country in the world being independent. Independent countries manage their deficits but also independent countries make the most of their talents, their resources and their attributes to build strong sustainable economies and that is, I think, the future that Scotland should grasp. 

“The fiscal position of Scotland now is a feature of how we are governed within the UK. It is not any indication of what life would be like in an independent Scotland, and there is no reason whatsoever that Scotland as an independent country wouldn’t have the same ability to succeed as countries across the world, many of whom have far fewer resources and attributes than Scotland does."

However, Tory Scottish Secretary Alister Jack said the figures showed Scotland’s recovery from the pandemic would benefit from being part of the UK.

“These figures show how all of us in Scotland have benefitted from being part of a strong United Kingdom. Public spending in Scotland reached nearly £100bn as we tackled the pandemic and protected lives and livelihoods.

"Unprecedented UK Government support has allowed us to treat patients, vaccinate people, protect a third of our workforce through furlough and issue crucial loans to more than 90,000 Scottish businesses.

"We have been able to weather the COVID storm as part of the UK but we now face the challenge of rebuilding our economy and supporting our heroic NHS and other public services. Our focus remains on that task.

"We have faced a terrible crisis far, far stronger as one UK - and we will build back better as one UK."

Pamela Nash, chief executive of Scotland in Union, said the government should drop plans for a new vote on the constitution. She said: “Last year, living in the UK was worth £2,210 on average to every person in Scotland.

“What is beyond doubt is that leaving the UK would lead to deep austerity with vastly reduced spending on hospitals and schools, and it’s time for some much-needed honesty about that from the SNP.

“Together across the UK we can use the strength of our collective economy and the pound to ensure that no community is left behind as we build a recovery for everyone.

“It is now the duty of the government to keep the focus firmly on recovery and not waste time on an unwanted divisive second referendum.”

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