Is £8 billion a big number?

Let's draw full fiscal autonomy for Scotland and see what it looks like.

21 June 2015

There’s been a lot of talk about full fiscal autonomy (FFA) for Scotland recently.

As things stand, pooling and sharing resources with the rest of the UK helps us maintain higher per capita public expenditure in Scotland. This reflects, amongst other things, the fact that our lower population density makes delivering public services here more expensive.

To be paying our way under FFA we would need to be running a deficit / GDP ratio similar to the UK as a whole. This would mean finding an extra £7.6 billion or so a year, to cut our annual budget deficit back from 8.6 per cent of GDP to 4.0 per cent. I’m not going to rehearse the economics of all this; if you want the gory detail then Kevin Hague has you covered.

One of the problems with the FFA debate is that numbers with nine zeroes in them are pretty hard to get your head around. So in the chart above I’ve superimposed the forecast deficit gap for this year, to scale, on top of the latest official figures for total public sector expenditure in Scotland (NB: I’ve drawn the deficit gap under FFA, our forecast total deficit is £14.2 billion).

So, is £8 billion of spending cuts and / or tax increases a big number?

You decide.

Sources

• Government Expenditure & Revenue Scotland 2013-14, Scottish Government
• Economic and fiscal outlook, March 2015, Office for Budget Responsibility
• Scotland’s fiscal position: an update, Institute for Fiscal Studies