Scotland will still be £9 billion in the red when the UK's in the black

The first sign of a recovery would be beyond 2015/16. But by 2019/20 when the UK is expected to record its first surplus in years, Scotland will be lagging behind with a deficit of £9 billion.

Professor McLaren’s analysis was based on projecting Government Expenditure and Revenue Scotland figures, which were published this week and showed that spending exceeded revenue by £15 billion in 2014/15.

“When the UK returns to balance (in 2019-20) Scotland is still around £9 billion

in deficit (just under five per cent of GDP),” Professor McLaren said.

“A deficit of this size roughly equates to the UK’s fiscal position as recently as 2014-15, so clearly such a position is manageable, although that does not mean it is an easy place to be, as on-going austerity shows.

“Moving to a position of fiscal balance (be it current balance, excluding investment, or overall balance) would require substantial tax rises or spending cuts. This may be do-able, but the, largely unexplored, question remains - how might it actually be done?”

He added: “With a second referendum on independence being mooted in the event of the UK voting to leave the EU, details on how any such deficit might be accommodated remains a relevant issue and concern.”

A Scottish Government spokeswoman said: “The GERS figures show our onshore economy is doing well, with onshore revenue having grown by more than £6 billion over the last five years, giving us a strong base to build our future progress on. This analysis shows that onshore revenues will grow by £19 billion up to 2020-21, vastly outstripping the decline in offshore revenues.

“Scotland’s fiscal position under independence would depend on a number of factors – including the public policy choices made by future Scottish Governments, the level of growth between now and day one of independence, and Scotland’s contribution to the UK-wide public services, none of which are reflected in the GERS figures.”

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