The Deficit & GERS


The first point about GERS is that whatever the truth about the figures, they reflect what happens in the UK, NOT what would happen in an independent Scotland. The main purpose of being independent is that we would make choices which suit us.

If Scotland really had such a deficit, what sort of advert is that for 300+ years of Union?

The GERS figures are mostly guesstimates i.e. 8.2% of whatever the UK figure is is allocated to Scotland, a methodology which is unsound because the separate data for Scotland so far does not exist.

According to GERS 2019 the UK deficit was £23.5bn while Scotland's was £12.6bn, i.e 8.2% of the population produced between 54% and 60% of the UK's deficit. This is not even plausible. The UK deficit is the balance of the various nations and regions of the UK. Every region except SE England was supposed to have produced a deficit (NW England £20.8bn, Wales £13bn, N Ireland £9.2bn) For this to be plausible London and the SE would have to have had a surplus of £80bn, not credible despite London's appropriation of so much of the wealth created around the UK.

Firstly, there is a massive bias in financial services in the UK that the Tax Justice Network has recently pointed out. This means that large amounts of value are extracted from Scotland and recorded in London, where the tax is paid on it. Scotland subsidises the south-east of England as a result. 

Secondly, there is massive wealth inequality in the UK, and both represent this looting of the rest of the UK by the financial services industry in the south-east of England. The income earned on the resulting disparities is again recorded mainly in south-east England. 

And thirdly, to suggest – as the GERS notes suggest – that profits are appropriately allocated to Scotland on a case-by-case basis is just nonsense. Richard Murphy has worked on issues of profit allocation between countries for years and developed a method of doing so that is called country-by-country reporting to address this issue. It is now used around the world, but there is no data in Scotland to appraise it. To then suggest that profits, and so corporation tax, are correctly apportioned is nonsense.

The original purpose of GERS was political ; the Secretary of State for Scotland under whom GERS was introduced, Ian Lang, wrote “I judge that [GERS] is just what is needed at present in our campaign to maintain the initiative and undermine the other parties. This initiative could score against all of them.”

The aim, as is the aim of almost all UK Government-produced data, is to prove that a financial services elite produces most of the value in the UK and that, as such, the interests of those with wealth, based in the City of London and largely living in the south-east of England, must have priority in all matters, including tax, fiscal policy, regulation and more besides. The rest of the country must behave as supplicants to ask for their mercy and goodwill for the handouts that they are offered. And GERS in this form really suits their purposes very well. But does it suit Scotland’s purposes? No, not at all.