Home U.K Sturgeon dealt blow after oil wobble predicted economic blackhole in independent Scotland

Sturgeon dealt blow after oil wobble predicted economic blackhole in independent Scotland

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Ms Sturgeon this week backed away from her continued threat to hold an independence referendum this year. It comes after the most recent independence poll showed more in favour of remaining a part of the UK. The poll, commissioned by Lord Ashcroft, revealed sentiment for Indyref2 to be at its lowest level in 18 months.

On Thursday, the Scottish First Minister set out a string of key actions her government will take in the first 100 days of the new Holyrood should the Scottish National Party (SNP) win re-election.

The omission of any early independence drive in the document was seen as a sign she would not immediately look to call for a new referendum.

Other serious questions have been asked of independence and the consequences of it recent times.

Ms Sturgeon says she wants to keep free trade flowing on the England-Scottish border if an independent Scotland rejoined the EU.

Nicola Sturgeon: The Scottish First Minister's Indy plans could be dampened by oil and gas

Nicola Sturgeon: The Scottish First Minister’s Indy plans could be dampened by oil and gas (Image: GETTY)

SNP: Sturgeon is hoping to use the Holyrood elections as a platform for an Indyref2

SNP: Sturgeon is hoping to use the Holyrood elections as a platform for an Indyref2 (Image: GETTY)

Her critics say this is near impossible.

Others draw attention to Scotland’s economy and whether or not it would stand up.

The country currently gets the bulk of its finances from oil and gas, having a large sector in the North Atlantic and the North Sea, Western Europe’s largest oil resources.

Yet, in 2016, the full extent of the impact of plunging oil prices on Scotland’s finances was laid bare in a report by the Institute for Fiscal Studies.

It showed that a post-independence government in Edinburgh would face the need to raise tax or cut spending to fill a £10billion-plus blackhole.

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Scotland oil: The country has a large oil and gas industry that appears to be declining

Scotland oil: The country has a large oil and gas industry that appears to be declining (Image: GETTY)

The IFS said the drop in the cost of crude from a peak of $115 (£82) a barrel in the months leading up to the 2014 referendum meant that while the UK as a whole would be back in surplus by the end of the decade, Scotland’s budget deficit would remain at more than 6 percent of national income.

It said that the SNP government’s forecasts for expected North Sea revenues ahead of the referendum were “increasingly further away from what is now expected”.

The outfit added that the deterioration in Scotland’s finances over the past 18 months amounted to £10.6bn or about £2,000 per head.

Many have since noted that Scotland can no longer hope to rely on its once lucrative oil and gas industry.

The Scottish Green Party’s co-leader, Patrick Harvie, earlier this month slammed the “reckless” funding and subsidies for fossil fuels in Scotland.

He said the country should instead invest and focus attention in renewable energy alternatives instead.

Scotland is not currently anywhere near being able to rely on such energy substitutes, however.

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[ANALYSIS] 

Oil subsidies: Sturgeon pictured at the Innovation Hub at the Oil and Gas Technology Centre in 2017

Oil subsidies: Sturgeon pictured at the Innovation Hub at the Oil and Gas Technology Centre in 2017 (Image: GETTY)

Alex Salmond: Sturgeon faces a challenge in her former mentor Alex Salmond and his Alba Party

Alex Salmond: Sturgeon faces a challenge in her former mentor Alex Salmond and his Alba Party (Image: GETTY)

Between 2019 and 2020, the country’s share of North Sea oil and gas tax receipts fell by around half to £724 million, according to tax and spending figures.

The data, published in the Government Expenditure and Revenue Scotland (GERS) report for 2019-20, showed the country’s net fiscal balance, including North Sea revenues, was in the red by £15.1 billion, 8.6 percent of gross domestic product (GDP), compared to a shortfall of £13.2bn in 2018-19.

This is compared to a total UK deficit of 2.5 percent of GDP.

Robert Tombs, the British historian, has argued that aside from this, Scots would inevitably end up paying more tax if the country became independent.

Reflecting on the Brexit vote, he told Express.co.uk: “All the turmoil we had in leaving the EU, Scotland would have in leaving the UK.

Sturgeon profile: She took over the role after Scotland's failed 2014 independence referendum

Sturgeon profile: She took over the role after Scotland’s failed 2014 independence referendum (Image: Express Newspapers)

“They would end up with a border, with having their trading relations disrupted; they would end up paying more taxes and being poorer.

“Nicola Sturgeon may get a majority of seats in the Scottish Parliament, but she’s not likely to get a large majority of the Scottish electorate.”

Meanwhile, Ms Sturgeon this week urged UK voters to punish Mr Johnson over the “stench of sleaze” around the UK Government.

But if Lord Ashcroft’s poll is to be believed, Ms Sturgeon could be the one in murky waters.

Boris Johnson: The PM has repeatedly refused to entertain the idea of an Indyref2

Boris Johnson: The PM has repeatedly refused to entertain the idea of an Indyref2 (Image: GETTY)

It showed the Yes and No camps were in a “statistical dead heat”.

Support for the Union remains on a knife edge, with 51 percent backing the UK compared to 49 percent in favour of independence, once don’t knows are excluded.

But Ms Sturgeon might find some solace after it also found 49 percent are likely to vote SNP in the constituency ballot – giving the SNP a three-seat majority.



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