Scotland’s Public Spending Deficit Drops, but Challenges Remain

Scotland’s public spending deficit in the 2022-23 financial year has decreased from the previous year’s record high, thanks to higher oil and gas revenues fueled by a global rise in oil prices. According to the government’s expenditure and revenue Scotland (Gers) report, the per-person deficit stood at £1,521, a significant improvement from £2,184. However, despite this progress, Scotland’s deficit remains substantially higher than that of the UK as a whole, with most of the difference attributed to higher government spending in Scotland.

The Institute for Fiscal Studies has warned that the deficit gap is likely to widen again in the coming years if oil and gas prices decline as predicted. Excluding North Sea revenue, the total deficit is estimated to be £28.5 billion, an increase from £19.1 billion.

The report highlights that Scotland raised £87.5 billion in revenue in 2022-23, including income from North Sea oil, which reached its highest-ever level at £9.4 billion. Cabinet Secretary Neil Gray acknowledged the significant contribution of oil and gas receipts to the decrease in the deficit but also emphasized the revenue opportunities presented by renewables, aligning with Scotland’s net-zero ambitions.

While the Scottish government opposes the granting of new oil and gas licenses, Gray refrained from taking a position on the proposed new Rosebank oilfield, stating that the decision lies with the UK government. This issue has posed a challenge for the SNP, as their commitment to a just transition from North Sea drilling clashes with their coalition partners, the Scottish Greens.

The Gers figures are frequently used by both sides of the constitutional debate to support their arguments. While Gray highlighted Scotland’s contribution to UK public finances through its energy sector, Scotland Secretary Alister Jack emphasized the benefits that people in Scotland receive as part of the United Kingdom.

It is crucial for Scotland to achieve sustained economic growth to avoid excessive spending cuts or tax increases if it were to become an independent nation, according to David Phillips of the Institute for Fiscal Studies.


Q: How much did Scotland’s public spending deficit decrease in the 2022-23 financial year?
A: The per-person deficit fell from £2,184 to £1,521.

Q: How does Scotland’s deficit compare to that of the UK as a whole?
A: Scotland’s deficit is higher than the UK’s, with a gap of 9.0% of GDP versus 5.2% of GDP.

Q: What is the main reason for the deficit difference between Scotland and the UK?
A: The majority of the gap is due to higher government spending in Scotland.

Q: What could cause the deficit to widen again in the future?
A: If oil and gas prices decline as predicted, the deficit is likely to increase.

Q: How much of Scotland’s deficit is attributed to higher government spending?
A: Most of the deficit difference between Scotland and the UK is due to higher government spending in Scotland.