Nicola Sturgeon told Covid crisis has ‘blown hole’ in Scots economy – independence warning

Nicola Sturgeon on hopes for Scotland to 'trade freely' with EU

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David Phillips, an Associate Director at the Institute for Fiscal Studies, was speaking after the publication of the think tank’s new assessment of the election manifestos of the three main parties north of the border. Mrs Sturgeon is touting May 6’s Holyrood elections as a key date in the push for independence, and will use any majority the SNP achieves to push for a second independence referendum, or Indyref2.

However, Mr Philips told The Times the pandemic had “blown a hole” in the finances of both Scotland and the UK in general.

He explained: “That would mean we’re having to do a fiscal tightening at a UK level.

“Scotland would have to do that added on top of the one that was already there.”

It’s clear that an independent Scotland would start life with a large deficit

David Phillips

Mr Phillips said it had become clear that there had been a “harder” Brexit than previously envisaged, with the result that issues centred on the border had consequently become “more tricky”.

He added: “It’s clear that an independent Scotland would start life with a large deficit.

“It would need to get that down, and that would mean difficult choices.

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“That doesn’t mean Scotland can’t afford to be independent. Scotland’s a relatively rich country.

“But it would need to make sure that it cut its cloth to fit the size of its own purse, rather than having fiscal transfers from the rest of the UK.”

Mr Phillips’s assessment echoes that of Professor David Blake, whom earlier this month told that, according to his calculations, independence would cost Scotland an additional £26billion a year – equal to more than £4,750 per head.

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The Professor of Economics at City, University of London presented his arguments in Scottish independence – playing by EU rules, a new report published on the Briefings for Britain website.

He highlighted a study by the London School of Economics this year suggesting Scotland’s economy would shrink by £11billion annually as a result of breaking away from the UK.

In addition, Prof Blake calculates that the loss of fiscal transfers from the rest of the UK would result in an additional net reduction of £15billion.

As a result, going it alone would deliver a £26billion hit to Scotland’s economy, based on the latest Statista figures which put Scotland’s GDP at £168.14billion.

Because the Office for National Statistics (ONS) currently estimates the population of Scotland to be 5,463,300, this is equal to £4,759.03 for every person living north of the border.

Ms Sturgeon herself has dismissed concerns over the size of Scotland’s budget deficit after independence.

Speaking this week, she insisted “pretty much every country in the developed world has a massive deficit right now and are shouldering massive debts” and that an independent Scotland was no different.

She added: “Therefore, I don’t think it’s credible to suggest that an independent Scotland would somehow be in a uniquely different position.”

“We would manage the deficit in the way that other countries manage deficit, through a combination of careful spending decisions and borrowing in order to, in a way consistent with supporting the economy and supporting people, bring the deficit and debt back to reasonable levels.”

She also claimed if Scotland was in a worse place financially than the rest of the UK, it actually strengthened the case for independence because it suggested different decisions should be made north of the border.

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