Scotland’s deficit grows by £5.1bn, Gers figures show

Key Points

Scotland’s deficit increases by £5.1bn from previous year
UK deficit less than half the rate of Scotland
Scottish Government says increase linked to fall in North Sea revenue
SNP accused of ‘reckless financial vandalism’ by Scottish Labour
Finance sec insists ‘Scotland’s public finances are better than many other parts of the UK’

Scotland’s finance secretary has insisted the country’s finances are “sustainable” as figures showed spending levels were more than £26 billion higher than the amount raised in revenues.

The latest Government Expenditure and Revenue Scotland (Gers) figures reported “overall public finances in Scotland weakening, as expenditure grew faster than revenue”.

For 2024-25, Scotland has a net fiscal deficit of minus £26.5 billion – an increase of £5.1 billion from the previous year – with this the representing minus 11.7% of the country’s GDP.

The UK deficit for 2024-25 was minus 5.1% of GDP, less than half the rate of Scotland.

The Scottish Government report said the “deterioration” between this year and last was in part linked to a fall in North Sea revenue, but it added: “The difference is primarily explained by movements in non-North Sea revenue and spending, with Scottish revenue growing more slowly and Scottish expenditure growing more quickly than the UK.”

Revenue in Scotland grew by 1.5% in 2024-25 to £91.4 billion.

Spending increased to £117.6 billion in 2024-25, up from £111.4 billion in 2023-24.

‘Public spending higher than UK average’

“As a share of GDP, public spending remained at historically high levels in 2024,” the report noted.

Scottish secretary Ian Murray said the figures show Scots benefit from higher public spending than the UK average – with this £2,669 more per person north of the border.

He said this “means more money for schools, hospitals and policing, if the Scottish Parliament chooses to invest in those areas” – although he also claimed “people in Scotland will rightly expect to see better outcomes” for these higher spending levels.

Murray said: “These figures underline the collective economic strength of the United Kingdom and how Scotland benefits from the redistribution of wealth inside the UK.

“By sharing resources with each other across the UK, Scots benefit by £2,669 more per head in public spending than the UK average.

“It also means that devolved governments have the financial heft of the wider UK behind them when taking decisions.”

‘Scotland’s finances better than other parts of UK’

Scottish finance secretary Shona Robison said decisions taken by ministers at Holyrood “are helping support sustainable public finances”.

She said: “For the fourth year in a row, devolved revenues have grown faster than devolved expenditure.

“Scotland’s public finances are better than many other parts of the UK, with the third highest revenue per person in the UK, behind only London and the South East.”

She also stressed the Gers statistics reflect the current constitutional arrangements, with Scotland part of the UK and “not an independent Scotland with its own policy, decisions on defence spending and the economy”.

Robison said: “Gers allocates Scotland a population share of reserved UK spending rather than accounting for real expenditure. For example, UK defence expenditure is listed as £5.1 billion, but only £2.1 billion was actually spent with industry in Scotland in 2023-24.

“Being taken out of the EU, against the will of the people of Scotland, has also hit Scotland’s revenues by £2.3 billion, and the higher cost of UK Government debt adds £500 million to the deficit.

“Falling oil prices and a decrease in extraction present challenges going forward, but we are clear in our support for a just transition for Scotland’s valued oil and gas sector, which recognises the maturity of the North Sea basin and is in line with our climate change commitments and energy security.”

Opposition

Responding to the figures, Scottish Labour finance spokesperson Michael Marra asscused the SNP government of “reckless financial vandalism”.

“The SNP has already blown a hole in Scotland’s finances and its full fiscal autonomy plans would make a bad picture worse”, he added

“Scotland is benefiting disproportionately from Labour’s game-changing investment in public services, but this money is being squandered by an incompetent SNP government.

“The SNP cannot be trusted with public money – but Labour is investing in Scotland’s future and a Scottish Labour government will spend this money properly.”

Scottish Conservative shadow finance secretary Craig Hoy MSP said: “The SNP Government’s own figures highlight the huge, and rising, Union dividend that Scots enjoy thanks to being in a strong United Kingdom.

“Every single person in the country is almost £2,600 better off because we are part of the UK.

“If we lost that – as we would if the SNP achieved their goal of Scottish independence – it would have a catastrophic impact on the nation’s finances.

“Things are bad enough already, because the SNP government continue to squander their positive financial settlement through mismanagement and waste. But losing the UK funding model would mean even more eye-watering tax hikes and public spending cuts for hard-working Scots.

“The GERS figures also underline the importance of North Sea oil and gas to Scotland’s fiscal security, and the economic lunacy of the Labour Government’s block on new drilling.

“Astonishingly, Keir Starmer’s reckless policy is backed by the SNP, Liberal Democrats and the Greens. Only the Scottish Conservatives are standing up for this crucial sector of the Scottish economy and the North East communities it supports.”