Deficit decreases to £19.1bn with booming North Sea revenues.

Home > Industry Analysis > Content

【Summary】Scotland's government spending deficit fell to £19.1bn last year due to increased oil and gas revenues. The deficit decreased to 9% of GDP, down from 12.3% the previous year. Revenue grew by £15bn to £87.5bn, with North Sea revenue reaching its highest ever level at £9.4bn. However, the deficit remains high at 9% of GDP when excluding North Sea revenue. Total expenditure for Scotland was £106.6bn, with spending increasing by £9.3bn. Scottish non-North Sea revenue increased by £8.1bn.

FutureCar Staff Aug 16, 2023 7:42 AM PT

Deficit decreases to £19.1bn with booming North Sea revenues.

Scotland's government spending recorded a deficit of £19.1bn last year, despite a significant boost in oil and gas revenues. The latest figures from the Government Expenditure and Revenue Scotland (GERS) show that the deficit decreased to 9% of GDP in the 2022/23 reporting period, down from 12.3% the previous year.

The data, which was published on Wednesday, estimates the difference between the amount of money raised through taxation and the amount spent on public services. In the 2022/23 period, revenue increased by £15bn to £87.5bn, accounting for 8.6% of UK revenue. This represents a 20.7% increase from the previous year, the largest increase on record.

The growth in revenue was mainly driven by an increase in North Sea revenue, which reached its highest level ever at £9.4bn in 2022/23. However, even with a decrease of £4.6bn in the deficit over the past year, it still remains at 9% of GDP. When excluding the North Sea, the deficit was 15.1% of GDP (£28.5bn), according to the GERS statistics. In comparison, the deficit for the UK as a whole is 5.2% of GDP.

The total expenditure for the benefit of Scotland by the Scottish Government, UK Government, and other parts of the public sector was £106.6bn. This reflects an increase of £9.3bn (9.5%) due to factors such as inflation-linked reserved public sector debt interest payments and the introduction of cost of living support.

The report attributes the strong growth in expenditure to high energy prices and the introduction of the Energy Profits Levy, as well as the recovery from the revenue falls caused by the pandemic. Scottish non-North Sea revenue also saw an increase of £8.1bn to £78.1bn (7.7% of UK revenue), with income tax, national insurance contributions, VAT, and non-domestic rates contributing significantly to the growth.

Wellbeing Secretary Neil Gray expressed satisfaction with Scotland's improving finances, highlighting the role of Scotland's progressive approach to income tax and the vibrant energy sector. However, he also pointed out that Scotland's natural wealth benefits the UK as a whole, with only a portion of the revenue being retained by Scotland.

Scottish Secretary Alister Jack emphasized the economic benefits of being part of the United Kingdom, highlighting the deficit figures and the higher levels of public spending in Scotland. On the other hand, Scottish Labour finance spokesperson Michael Marra argued that the statistics demonstrate the economic benefit of remaining in the UK and criticized the SNP's plans for independence as a potential cause for austerity.