Wings' Idiot's Guide for GERS Deniers

There's a new offering from Wings Over Scotland - what we might call an idiot's guide for GERS deniers

Let's take each of the six points in turn - this won't take long ...

As this blog has frequently highlighted, the Scottish economy's onshore revenue generation compares well with other UK regions. What the GERS figures show is that UK-wide pooling and sharing allows us to maintain a higher level of public spending than we would otherwise be able to sustain. Quite how the fact that - when oil has declined - Westminster allocates us more than our "fair share" of spending is a source of grievance escapes me.

This is a tired trope that I address in detail here (> Gers Deniers). In simple summary: the methodology has been completely overhauled since the figures were originally produced, are published now by an SNP-led Government with Scottish civil servants being willing to override the treasury's figures and who - for example - provide their own analysis of the Scottish Government's preferred definition of Scotland's geographical share of oil revenue

I've yet to see any evidence to support the bizarre accusation that the UK government "refuses" to give the Scottish Government access to relevant important data.

As for the quote from Merryn Somerset-Webb: if you read the original article (or are lucky enough to discuss it with Merryn, as I have done) you would know her substantive point was about assumptions around corporation tax allocation which - as this blog has also pointed out - can indeed be little more than guess-work. The point, of course, is that given it's the Scottish Government doing the guessing, the assumptions are more likely to be generous to Scotland  than pessimistic.

For what it's worth, Merryn has quoted chokkablog's GERS and Price of Independence analysis at length in her FT column, and agrees with it.

This one's a cracker. As this blog has argued in painful detail and explained at great length, the "black-hole" (as identified by the IFS and this blog among others) is the amount by which Scotland's deficit is greater than our current share of the UK's. The deficit isn't the black-hole, the deficit gap is the black-hole. For example in 2014-15 Scotland's deficit was £14.9bn but the deficit gap (the "black hole) was roughly £8bn.  See Full Fiscal Autonomy for Dummies if, like Wings, you still haven't grasped this basic concept.

Here Wings takes a point that nobody disputes (namely that an independent Scotland's finances would necessarily be different from those we see in GERS) and leaps to the idiotic conclusion that where we start from (GERS) "has no bearing at all" on where we might end up if we were independent.

GERS shows how our public finances stack up based on the revenue we currently raise (the taxes we're used to paying) and the money that we currently receive in public expenditure (yes, including reserved spending and shared UK costs). The whole point is that this is just the starting point, the run-rate, the pro-forma accounts from which anybody making the case for independence needs to build.

If this isn't clear, I address the argument in more detail here (GERS deniers)

As for the argument that a newly independent Scotland might establish its own currency or join the Euro after reneging on its share of UK debt - well it's a (to be kind) very debatable strategy, but it's not a "Fact about GERS". GERS explicitly shows our share of debt interest cost (£2.8bn in 2015-16) so anybody who believes they can argue for a debt free Scotland can easily see the theoretical debt cost saving.

This is effectively the same point as "Fact" 5 above. Nobody is arguing that things would remain the same. Those of us who argue for rational debate simply ask for those making the case for independence to actually explain coherently what the different "economic strategy" would actually be and provide a realistic assessment of how (and by how much) it would change the figures compared to those of Scotland being within the UK.

Of course to be robust, any such analysis also needs to take into account the downsides of leaving the UK, like finding and funding a currency solution and managing the impact of being on the other side of an EU/UK trade boundary.

As a parting observation: we don't know yet if a future EU/UK trade boundary will exist, but if it does and being on the UK side of it hurts our EU trade, the obvious mirror effect also applies - being on the EU side of it would hurt our UK trade - and we export four times as much to the rest of the UK than we do to the rest of the EU.