Will independence propel Scotland into the OECD top six?

On Thursday, Alex Salmond repeated claims made in October that Scotland would be the sixth richest country in the OECD if it were to gain independence from the Union.

Writing in the Independent, the Scottish First Minister argued that an independent Scotland could more than hold its own in the world economy, and its citizens would be better off than the average UK citizen. So what is the evidence for this?

The data being referenced by Mr Salmond is the OECD's league table of nation's GDP per head (expenditure approach), which shows that the UK is currently in sixteenth place with a figure of $35,512 per capita. Australia currently sits in sixth place with $40,179 meaning that Scotland would have to exceed the UK's current GDP per capita by $4,665.

Transaction	Gross domestic product (expenditure approach)
Measure	Per head, US $, current prices, current PPPs
Frequency	Annual
Time	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011
Country
Luxembourg		53 923	57 559	60 728	64 998	68 372	78 573	84 559	89 156	82 973	86 226	..
Norway		37 085	37 052	38 262	42 479	47 640	53 846	55 874	61 332	54 708	57 231	..
Switzerland		32 098	33 391	33 269	34 524	35 478	39 141	42 746	45 641	44 773	46 622	..
United States		35 866	36 755	38 128	40 197	42 414	44 522	46 227	46 647	45 087	46 588	..
Netherlands		30 783	31 943	31 705	33 197	35 111	38 088	40 736	42 929	41 089	42 175	..
Australia		29 234	30 441	32 090	33 507	35 115	37 105	39 067	39 058	39 971	(E)   40 719	..
Ireland		30 776	33 274	34 768	36 796	38 896	42 522	45 418	42 575	39 750	40 458	..
Denmark		29 432	30 756	30 430	32 290	33 196	36 048	37 723	39 841	38 299	40 170	..
Austria		29 025	30 463	31 319	32 856	33 637	36 586	38 073	39 785	38 834	40 017	..
Canada		29 332	29 911	31 267	32 837	35 106	36 863	38 350	38 989	37 853	39 070	..
Sweden		28 226	29 278	30 420	32 494	32 701	35 703	38 478	39 613	37 192	39 024	..
Belgium		28 524	30 054	30 292	31 190	32 195	34 240	35 646	37 005	36 698	37 676	..
Germany		26 707	27 446	28 354	29 684	31 117	33 552	35 559	37 115	36 048	37 411	39 377
Finland		26 531	27 531	27 616	29 863	30 708	33 140	36 167	38 077	35 848	36 585	..
Iceland		30 438	31 084	30 776	33 731	34 992	35 831	37 171	39 521	36 718	35 642	..
United Kingdom		27 573	28 888	29 851	31 779	32 724	34 992	35 712	36 175	34 511	35 512

Data extracted on 13 Jan 2012 18:09 UTC (GMT) from OECD.Stat

The SNP has predicted that Scotland would reach £41,348 per capita, based on their own calculations.

So how has the SNP come to this conclusion?

According to the the SNP press office the calculation was made by the Scottish Government and was based on the following data:

• Annual International GDP per capita data produced by the Organisationfor Economic Cooperation and Development (OECD).

• Estimates of annual Scottish GDP levels produced as part of the
  Scottish National Accounts Project (SNAP).

• Annual Scottish population estimates produced by the General RegisterOffice for Scotland (GROS);

• Annual GDP and population figures for the UK produced by the Office for National Statistics (ONS).

Unfortunately, the exact calculations are at this time unclear although Full Fact will be continuing its enquiries to discover more details.

However, the SNP has previously indicated that North Sea Oil will be the driving force behind Scotland's progression. When John Swinney MSP first made the claim that Scotland could be six richest nation, he explicitly acknowledged that calculations were based on Scotland acquiring its 'geographical share (of) offshore resources'.

A quick look at figures for North Sea oil revenue demonstrates the boost that a geographical share of oil, rather than the current per capita share, could give to Scottish finances.

Whilst the figures below are Government revenue statistics,and therefore not directly comparable with the OECD's GDP per capita figures, the fact that the Scottish Parliament calculates a windfall of over £5.3 billion gives some indication of the boost that it expects to receive from the move. This figure is the equivalent to £1,000 per head.

Table 5.5: Current Revenue (Per Capita Share of North Sea Revenue): Scotland 2009-10

Table 5.6: Current Revenue (Geographical Share of North Sea Revenue): Scotland 2009-10

(http://www.scotland.gov.uk/Publications/2011/06/21144516/7)

So while these figures do give some credence to claims that Scotland would benefit from an economic windfall, by themselves they cannot prove claims that Scotland's economy would out-perform the UK by over $5,000 per head.

Full Fact will continue to investigate the calculation undertaken by the Scottish Government to reach the figure of $41,348 per head and update this factcheck in due course. As the debate over independence rumbles on, we will of course be keeping a close eye on the claims profuced on both sides of the debate.

UPDATE: 17/01/2012

Full Fact has managed to contact the Scottish Government in order to gain more insight into how the figures were calculated.

A Scottish Government spokesperson commented:

"Government and Expenditure Revenue Scotland 2009-10 figures show that, including a geographical share of UK North Sea oil and gas revenues, Scotland contributed 9.4 per cent of UK public sector revenue and received 9.3 per cent of total UK public sector expenditure, including a per capita share of UK debt interest payments. Including a geographical share of North Sea revenues, Scotland's estimated current budget balance in 2009-10 was a deficit of 9.0 billion pounds, or 6.8 per cent of GDP - stronger than the UK-wide deficit of 107.3 billion pounds, or 7.6 per cent of GDP for the same year, including 100 per cent of North Sea revenues.

"Scotland generated 9.4 per cent of UK tax with 8.4 per cent of the population - the equivalent of 1,000 pounds extra for every man, woman and child in Scotland."

The Government goes further in explaining that:

"Some 40 per cent of reserves remain in the North Sea, with over half of the value still to be extracted — representing an asset base with a wholesale value of one trillion pounds.  While this is no more than equivalent to the scale of the UK's national debt, it is over ten times a pro-rata Scottish share of UK debt — reflecting Scotland's stronger asset base and bankability."

Conclusion

According to the Scottish Government, there is currently a £1,000 per capita discrepancy between the tax generated by Scots and the proportion of the population for which they account. If we add this to the extra revenue that would be generated for an independent Scotland responsible for its geographical share of North Sea oil and gas - estimated to be another £1,000 per head - then we start to approach the $5,000 per capita boost to GDP needed to reach the sixth spot in the OECD tables (although by our calculations there remains something of a shortfall).

Of course, whether these figures would be borne out in the eventuality that Scotland gained its independence would very much depend upon the terms of the break with the Union, so for now these calculations must remain speculative.