This article has been edited for balance and flippancy control.
I saw a comment on Facebook earlier. A guy was saying how it was outrageous that “16% of the population [Scotland, Wales and NI] has to pay 58% of the UK’s deficit, and that we are being f**ked over.
This is to do with the whole “GERS” argument that has been doing the rounds on social media for the last week or so, since Professor Richard Murphy declared that in his opinion, the GERS statistics (the UK Government’s supposed accounts for Scotland) are essentially rather poor indeed.
I had intended to avoid the whole GERS thing, because it has been comprehensively covered by Wings, WGD, and others already, and I don’t honestly have anything new to add. Neither do I claim to be an economist. If you’ve been following those, you can safely go and find something else to do, you won’t be missing anything.
However, on reading the Facebook post, it struck me that maybe a fair amount of people are still unaware of the issue, or don’t quite grasp what it’s about, and that maybe a summary of sorts might be helpful, so here it is.
We are kind of being f**ked over, but not quite in the way that the Facebook comment suggests. We don’t “pay” the deficit as such. It isn’t the same thing as the debt. The deficit is the difference between our revenues and our expenditure, annually. Almost all countries run a deficit, and they go up and down. We have to borrow to make up the difference, which results in the debt. It’s only a real problem though, if the deficit is too high, for too long (i.e. the debt becomes unsustainable).
One problem, but not the biggest one, arises because the only official statistics we have for Scotland’s economy are frankly (as Professor Murphy and others have pointed out) not the best. GERS was originally designed to make our economy look bad. It’s a set of estimates and extrapolations based on the UK accounts. It should however be pointed out, that great efforts have been made in the last ten years or so at improving the methodology, and therefore, the accuracy of GERS. The report is produced by civil servants for the Scottish Government, but is based on data provided by the UK Government. Professor Murphy claims that means that the data is open to manipulation by them.
The truth is almost none of the data used is actually measured or collected for Scotland, or for the UK as a whole. It’s basically, guesswork to a large extent. That said, there isn’t really a way of collecting much of the data that wouldn’t be prohibitively expensive.
Basically, the figures shouldn’t be taken as cast iron fact, but that’s just my opinion, and I’m no economist. I can tell you they wouldn’t be acceptable to a scientist as evidence. The UK Government (and every unionist drone on social media) is using these figures to tell us things like we have a £15bn deficit, and that that is a huge problem, as if that is an indisputable empirical fact. We have the largest deficit in Europe they say (worse than Greece), or we won’t be allowed to remain in the EU because we don’t meet the criteria (despite the fact that the Copenhagen criteria refer to joining the Euro, not the EU, so that’s double bollocks).
Here’s the thing though. When you have no definitive, empirical proof, you cannot claim something is a fact. All you have is probability. So what is the probability that Scotland, with 8.2% of the UK population, is responsible for 17% of the UK deficit? Pretty low I would say, or to quote Professor Murphy; “exceptionally unlikely”. Even if the deficit figure is fairly accurate, how is that a good advertisement for staying in the union, when it is the UK Government who are currently managing the economy?
The real problem with GERS though, is that they only describe a Scotland that is part of the UK. They have no bearing whatsoever on the finances of an independent Scotland. The Scottish Government has no control over the economic levers that would allow iScotland to do things differently. When unionists use the deficit as described in GERS to tell you that an independent Scotland would be an economic basket case, and would have to cut spending by £15bn, remember this simple fact:
Fairly large deficits are not a big deal. They don’t mean that spending cuts are immediately required, and they don’t mean that a country couldn’t be independent. In fact they’re not necessarily a problem at all.
I saw a Labour flyer earlier today where it was presented as fact. “The Nats are lying to you” it said. “They won’t admit that independence would mean £15bn in cuts”. Yeah, we won’t admit it, because it’s bollocks.