The Common Weal Think-tank analysis of GERS 2017 reveals the economic opportunities of Scottish independence
Modest estimates by Common Weal show that an independent Scotland could be better off to the tune of at least £7.5 billion in comparison to the figures in the GERS paper published today effectively cutting the deficit by over half.
As the GERS paper mentioned on several occasions the statistics are estimation of the financial management of the Scottish economy as a region within the United Kingdom, where most of the economic power currently lies. Common Weal calculates that the very act of Scottish Independence would boost tax revenue by at least £7.5 billion per year. The brand new analysis paper can be read in full here.
Key points:
- The UK is a deeply unequal union and London continues to capture a greater and greater proportion of the wealth of the state to the detriment of everywhere else.
- Scotland’s offshore economy continues to shrink even whilst offshore tax revenue has risen slightly
- However the growth in Scotland’s onshore economy more than offsets this loss. Relative low collection of direct tax revenue such as income tax and capital gains taxes remains an indicator of the economic inequalities of the UK.
- Whereas relatively high rates of collection of alcohol and tobacco revenue may be an ongoing indicator of higher stress and lower wellbeing in Scotland. This should be subject of further study.
- Scotland’s share of the UK’s debt interest payments now stand at £3.25 billion per year; more than the entire transport budget.
- Whilst GERS itself does not illustrate an independent Scotland’s finances, Common Weal has produced metrics which allow it to be estimated.
- The creation of formerly reserved government departments like the civil service, Central Bank and others will create thousands of jobs in Scotland and create more than £1.3 billion in revenue per year.
- Even assuming defence spending is maintained, basing more of it in Scotland would create additional tax revenue of at least £200 million per year.
- An allocation of debt and assets based on historical precedents would save Scotland around £2.5 billion per year in debt interest repayments.
- A more efficient approach to tax and customs would eliminate major flaws in the UK system and could help close the UK’s £120 billion per year tax gap. Even just a third of Scotland’s “share” of this gap would be worth £3.5 billion in revenue.
Commenting on the analysis, Director of Common Weal Robin McAlpine said:
“If we want to have a serious discussion about the progress in growing Scotland’s economy and thereby creating the tax revenues to support public services, we need to have an honest debate about how much of the UK’s growth is captured by London and how little is shared among all the other regions combined. Devolution must involve the devolution of prosperity, not just of administration.”
This analysis was informed by Common Weal’s ongoing work on the White Paper Project. For more background on the White Paper Project click here and for more information the on the work behind this analysis click the links below.