Tuesday, 5 April 2016

Deficit? Scotland can deal with it

Yesterday's post about the deficit set out some facts with little interpretation, but for the next couple of posts I'm going to liberate myself from my usual style and attempt to present the same information from other points of view. In this one I become a pro-independence supporter who's somewhere in the centre ground of politics. Rest assured (or become restlessly disturbed) that I intend to play the part well and put forward the best argument I can construct.

It's completely normal for a country to have a deficit. An independent Scotland would not be at all unusual for having one and most of our EU neighbours run deficits. But it is right to ask how we would deal with it. Let's look at the numbers.

We shouldn't focus too much on any one year, and circumstances of the past are unlikely to be similar to those in years ahead, especially with independence. We're still in the wake of the worst crisis since the great depression so recent years are not typical. But there are clear examples in the past, like 2000-01, where you can see Scotland's revenue matching its spending. No one denies the North Sea bonus is absent for now, and it serves as a reminder that it is wise to diversify and foster growth in new sectors. The question concerning raising revenues to match spending is not an if, but a how.

The way forward can be seen on the graph. Look at onshore revenue since 2009-10: it has grown in every year and risen by over £4 billion per year, or £12 billion over all those years. We have steady and uninterrupted growth despite our economy being restrained by Westminster austerity. With full control of Scotland's fiscal levers and our own policies to boost renewables and prioritise our export industries we can accelerate this growth and bring revenues up to meet spending in coming years.

And to those who say the required growth cannot be achieved in a country like an independent Scotland, have a look at Ireland's real growth rate of 5.2% in 2014. Preliminary quarterly data for 2015 suggests higher growth still. Such a growth rate can close Scotland's deficit in five or six years.

Remember, these are not my own views but my best efforts to put forward the arguments of an independence advocate. In the next post I'll keep the saltire aloft but wave the flag of the union too.

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