Scotland will be hardest hit by the recession

Experts have warned that that Scotland is likely to be hit disproportionately by the impact the recession will have on the public sector. SNP criticisms of the report are based on including North Sea Oil revenues which PwC claim will "not protect jobs".

Experts have warned that that Scotland is likely to be hit disproportionately by the impact the recession will have on the public sector. A report by business consultants, PriceWaterhouse Coopers concludes that urgent reforms to the way public services work and are delivered are needed to avoided “draconian” cuts in the future.

A number of news reports outlined that while in England the public sector accounts for 40 per cent of total GDP, in Scotland that figure is 50 per cent. Scotland’s reliance on public services will therefore be hit as public spending cuts begin.

In response, the SNP Government criticised the findings. A spokesman for Finance Secretary, John Swinney commented:

    “There is no doubt that the UK is facing an extremely serious deficit in its public finances. The official figures for 2007/8 show that total public expenditure as a share of gross domestic product is 40 per cent for Scotland, including a geographical share of North Sea resources in Scottish GDP, compared to a UK-wide figure of 41%.
    “The Scottish Government is already taking action to respond to cuts imposed by Westminster.”

But Pricewaterhouse Coopers partner Mike Greig, speaking exclusively to Left Foot Forward, hit back:

“Excluding North Sea Oil gives a total of 47 per cent. Oil is a red herring. The SNP would love to think that it’s their oil … but it will not protect those jobs. This is the SNP trying to hide the size of the public sector in Scotland.”

The PWC report comes less than a month after Left Foot Forward reported on possibly the most difficult Scottish budget since devolution began a decade ago.

The report continued by setting out a series of options to control a £43 billion UK fiscal gap which the authors believe needs to be closed by 2015/16. The options they outline are:

  • maintaining current spending but raising taxes to £26 billion a year.
  • if health spending is to be protected, and tax rises avoided, spending would need to be cut by as much as 23 per cent over the next 3 years.
  • spreading the burden of the fiscal tightening evenly across tax rises and cuts to spending.

    One Response to “Scotland will be hardest hit by the recession”

    1. Alan W

      There’s political gamesmanship on both sides here. I’m no nationalist, and I think the proposition that Scotland is overly dependent on the public sector is essentially sound. I also agree that the SNP are trying to use North Sea oil to play down this dependence.

      However, none of this changes the fact that if you’re going to try and come up with a figure for Scottish GDP, pretending the North Sea oil industry doesn’t exist is completely ridiculous. There is no possible economic justification for this omission. The oil industry is there. It supports tens of thousands of jobs directly and indirectly, and the bulk of it is based around Aberdeen, with other significant hubs in Orkney and Shetland. Last time I looked at a map these places were all definitely in Scotland. No one would omit the production of an opencast coalmine from the figures, so why exclude the production of an oil rig?

      Excluding oil is, and has always been, a purely political ploy that has everything to do with influencing the debate on independence, and nothing to do with a serious attempt to measure Scotland’s economy. It’s long past time that those of us who want the Union to continue stopped playing into the SNP’s hands by pretending oil doesn’t count, and started taking on their arguments head on with honest statistics.

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