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Sturgeon dealt huge blow after oil wobble predicted economic blackhole in indy Scotland

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The Scottish First Minister today faced a grilling from MSPs at Holyrood over her plans for a second independence referendum. She said that a vote would be held after the COVID-19 health crisis had passed, but added her Scottish National Party (SNP) intends to hold Indyref2 by the end of 2023. The SNP were ready to unleash a fresh independence campaign last year but were stopped by the onset of the global pandemic.

The party recently partnered up with the Scottish Greens to form a pro-independence alliance, the Greens being the only other mainstream party in Holyrood who support a breakaway.

During the debate, Scotland Secretary Alister Jack said the deficit for the Scottish budget was £36.6billion last year, and was questioned by MSPs how the SNP expected to circumvent such a glaring discrepancy in the country’s finances with independence.

Other “black hole” scenarios have also long since faced Scotland’s economy.

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 (IFS).

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

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”.

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

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.

“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.”



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