The recent publication of the Government Expenditure and Revenue Scotland (GERS) figures for 2015/16 has demonstrated the challenging fiscal position for Scotland, at a time when the Scottish Government is looking at how to respond to the reality of an imminent Brexit.
Scotland’s share of North Sea oil revenues fell year on year from £1.8 billion to just £60 million. At the same time, onshore revenues grew by £1.9 billion, but this still left a net fiscal deficit of £14.3 billion or 9.1% compared with a UK deficit of just 4%.
Politicians will use the figures for their own ends, but it is clear that greater growth in the economy is needed to offset the continuing low levels of North Sea oil revenues. Relaxation of austerity measures at the UK level, and increased borrowing for investment in capital infrastructure, are now the new norm – but it is up to Government to create the opportunities for investment.
Meantime, the local financial services trade body Scottish Financial Enterprise has launched a high level strategic review aimed at identifying an overarching vision for the sector in Scotland.
There does seem in recent years to have been a disconnect between the Scottish Government and the local financial community, no doubt connected to the differing views held over the 2014 independence referendum. If this review can help bring the two closer together and find a synthesis of thought, aided perhaps by being on the same side on Brexit issues, then that would be beneficial.
Whether that is possible, given the predominance of financial institutions’ head office decision-making being in London (presently) rather than Edinburgh, is a moot point. This is a pity as there are significant opportunities in current circumstances to strengthen financial services in Scotland.
Click here to access the official GERS figures.