SCOTLAND’s £36bn deficit is “no obstacle” to independence, the Finance Secretary has said.
SNP MSP Kate Forbes also said that the arguments for independence have been “strengthened” because of the pandemic.
It comes as the latest Government Expenditure and Revenue Scotland (GERS) released today revealed that Scotland’s deficit has more than doubled because of the covid crisis.
The figures showed that Scotland’s notional deficit, the difference between spending and taxes raised, jumped from £15bn to £36bn due to increased spending to battle the covid crisis.
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But Forbes said that as 40% of spending is reserved to Westminster, as is 70% of revenue, the “powers and tools” the Scottish Government has to manage their finances in the long term are “significantly restricted”.
The Finance Secretary also said that the pandemic “strengthened the argument” for independence and for Scotland to grow its economy but that the Scottish Government is limited without the “full levers at our control” - such as borrowing powers.
Forbes made the comments during a press conference to discuss the release of the GERS figures.
Asked if the £36bn deficit is an obstacle to making the case for independence, and when a referendum will go ahead, Forbes said: “It is not an obstacle to making the case for independence because deficits across the world have risen exponentially and having the highest deficit in Europe does not seem to be an obstacle to the UK Government being independent, and the same argument would apply to us.
Forbes made the comments on the day of the GERS release
"This is a case for having the levers, the full control to manage our fiscal sustainability and nobody is defending those figures but I do think they come after a year in which workers, businesses and households have benefitted from a significant increase in spending to save lives.
“In terms of an independence referendum, we have said that once the crisis is passed we will turn our minds to independence and that remains our position.”
It comes as Forbes told The National that she is "committed" to work on a pro-independence GERS alternative after the Covid crisis has passed and that Scotland needs to “refresh its economic prospectus”.
The Finance Secretary also told journalists that she believes the arguments for independence have been “strengthened through the pandemic”.
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Forbes explained that before she took on the role of Finance Secretary, the same questions about the viability of an independent Scotland likely would have been asked when the deficit was only at around 8%.
She explained: “The UK’s deficit right now, as a result of an unprecedented shock, is about 14%, the highest in Europe.
“The fundamental difference is we all assume the UK Government will manage that position down because of the levers at its control, partly growing the economy and partly managing its finances in a prudent and sustainable manner, that is what countries around the world are doing.
“So yes, there is a strengthened argument for us to grow our economy and my position is that I can only go so far without the full levers at our control.”
Scotland's deficit is "no obstacle" to independence, Forbes said
Forbes added that as a large proportion of taxation powers and spending is reserved “the status quo is undefendable” and that the GERS figures and pandemic “strengthens our hand”, as the Scottish Government would have been able to use those powers in a “more tailored fashion”.
Probed on her response, Forbes was asked if there was “no level” of deficit that would give her pause regarding a transition to an independent country.
Forbes said: “I’m arguing that a few years ago, you would have told me 14% was an unsustainable level of deficit, which is what the UK government currently has. Back then the Scottish Government would have had an 8% deficit two or three years ago.
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“The fundamental difference between the UK Government and ourselves is that the UK Government will be able to manage that.
“The fundamental difference between Norway, Canada and any number of small advanced European countries is that they will manage their financial position in a sustainable manner in a way which we call for the levers to do, but those are denied to us.”
The Finance Secretary also said that Scotland does not have “all the controls and all the powers” that the vast majority of countries around the world will be utilising as they plan their recovery from the pandemic.
It comes as Nicola Sturgeon said that the deficit is “no barrier to any country in the world being independent”.
The deficit is now 22.4% of gross domestic product (GDP), an increase of 13.6 percentage points in the last year. In 2019-20, the deficit in Scotland was 8.8%.
In the rest of the UK, figures show a rise in the deficit from 11.6% to 14.2%
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