Record revenues drive recovery in Scotland’s finances

New figures show Scotland’s public finances are recovering from the coronavirus (COVID-19) pandemic faster than the UK as a whole.

The Government Expenditure and Revenue Scotland (GERS) 2021-22 statistics show Scotland’s deficit fell by 10.3% – compared to a drop of 8.4% for the UK.

Revenue rose to £73.8 billion, up a record £11.1 billion from the previous year, while public spending fell by £0.9 billion to £97.5 billion.

Deputy First Minister John Swinney said:

“Today’s figures show Scotland’s fiscal position is recovering faster than the UK’s, with a huge fall in the annual deficit thanks to the largest increase in revenues on record.

“This is before the full impact of the rise in oil prices that we’ve seen more recently, which is likely to see Scotland’s deficit fall faster than the UK’s again next year, with oil and gas revenue set to grow to £13 billion this year.

“The figures also highlight how the UK’s response to the cost crisis is being built on Scotland’s natural resources, not least with its windfall tax on the North Sea.

“But even without North Sea receipts, the record revenue generated was sufficient to cover all day-to-day devolved spending as well as all social security spending in Scotland, including the state pension.

“GERS describes Scotland’s current fiscal position under current constitutional arrangements, with 74% of revenue and 37% of spending reserved to the UK Government – and we know Scotland’s economy is already suffering as a result of austerity and Brexit. In the first full financial year since Brexit, the GERS figures show the economic harm of leaving the EU is driving up borrowing in the UK and contributing to the UK deficit being one of the largest in Europe.

“Even in the midst of an energy crisis, the UK as a whole is benefiting from Scotland’s natural wealth – which is why Scotland can expect its deficit to fall further in the future.”

Background

Government Expenditure and Revenue Scotland 2021-22

The net fiscal balance is the difference between total revenue and total public sector expenditure including capital investment. The GERS figures show that in 2021-22 Scotland’s net fiscal balance was a deficit of 12.3% of GDP (£23.7 billion).

The aim of GERS is to enhance public understanding of fiscal issues in Scotland. The primary objective is to estimate a set of public sector accounts for Scotland through detailed analysis of official UK and Scottish Government finance statistics. The report is designed to allow users to understand and analyse Scotland’s fiscal position under different scenarios within the current constitutional framework.

GERS is a National Statistics publication and is produced independently of Scottish Ministers. The publication has been assessed by the UK Statistics Authority in line with the Code of Practice for Statistics. This means the statistics have been found to meet user needs, to be methodologically sound, explained well and produced free of political interference.