BBC Question Time leaders special: Nicola Sturgeon fact checked
Nicola Sturgeon was challenged on tonight’s BBC Question Time about Scotland’s high budget deficit, after an audience member pointed out it would need to bring its deficit down to levels acceptable to the EU if it wanted to join. She argued that “that is a deficit that has been accrued under the Westminster system of government”.
Scotland’s net fiscal deficit is higher than that of the UK as a whole, as a proportion of the size of its economy. In 2018/19 it’s “deficit” was between 7 and 8.5% of its economy, depending on whether and how you count revenues from North Sea oil. By contrast, the overall UK budget deficit is expected to be about 2% of GDP in the same year.
It’s correct to say, as Ms Sturgeon goes on to, that “I don't control as first minister the macro economic policies of the United Kingdom.” In other words, the Scottish government can’t control things like interest rates.
The underlying argument here is that the deficit faced by an independent Scotland could be lower than it has as part of the UK, but independent experts have suggested this is unlikely to be the case.
As the Institute for Fiscal Studies has pointed out in the past, an independent Scotland would face pressures on its budget and would need to take action either by raising taxes or cutting public spending.
It also points out that the main policies to promote economic growth proposed during the last independence referendum were tax cuts and spending increases, which would increase Scotland’s budget deficit (in the near-term).
Scotland has some control over its own deficit at the moment, as it has powers to raise some taxes on its own. At the moment, around 29% of all the revenue collected in Scotland is devolved—which is much higher than it was before recent Acts of Parliament transferred additional powers to the Scottish government.
But another factor behind Scotland’s relatively big deficit is that government spending per person is higher in Scotland than the UK average. The Scottish government has previously put forward some reasons why, including its low population density and greater need for certain public services.