Tag Archives: ScoGDP

Scotland Ltd – The Difficulty with Turn Over

In my last post I looked to criticise the SNP’s approach to economic figures. They have a kind of default position which is ‘ we won’t know how much tax revenue we will get until we go independent and we will make decisions based on the realities of oil price and the global economy at that time’. Well that is not good enough ! They should really be challenging the GERS figures and not allowing them to be a stick they beat  themselves with.

In particular in my last blog I came amazingly, and suspiciously close to GERS figures for tax revenue by using UKGov and GERS statistics, oft quoted by Better Together. Suspicisoulsy because I allocated pro rata to the 8.6% of total UK population  and made only a minor tweek to income tax revenue, due to the surpisingly higher average wages which Scots can now boast over rUK average. With the deficit accredited by GERS, I was within a couple of billion either way, and I didn’t have the entire tax picture, there was more to come.

Hard to Get A Handle on Scotland Ltd’s Top Line ?

The trouble is with GERS is that it is very difficult to disaggregate Scotland Ltd from United Kingdom PLC on the balance book. The over riding reason for this is that companies are not forced to have a legal accounting entity north of the Border and even when they do, goods and services may well be accounted for by their southern offices or depots.

This applies to every part of the (private sector and VAT’ed) economy, apart from of course North Sea oil & gas which has a fortuitous geographically defined, by oil field reporting method due to the royalties excised per barrell. (Or not when tax right offs exceed income or what ever other fiendish mechanisms big oil corporates are using. They do invest hugely and have decommissioning costs too it has to be said. )  However the GERS figures and UKGov publications reveal discussion and disagreement about these figures, and make some estimates about on shore and supply chain contributions to Scotland Ltd.  If for example, the majority of 200,000 odd oil workers were taxed and payed NI in Scotland, or this was equated into GERS today, with their famous wage packets, how much smaller would the deficit be?

It should be easier for the GERS figures to come up with an income tax and NI figure based on statistical analysis of average wages and size of the work force. So I took a fag-packet figure on this. However higher wages and lower house prices mean that people are spending more on life’s luxuries, which are VATable, and it doesn’t look like GERS revenue factors in this or the Scot’s liking for a bevvy, or that commuting distances can be longer for our motorists. After my minor adjustment for higher revenues from income tax and NI, adding on arbitrary per capita basis, x 8.6% that is, we get amazingly within +/- £2bn of the GERS budget deficit of between £11-15bn depending on the year in the period 2012-2016.

What the SNP Need to Prove to Themselves and the Electorate- GERS Are Wrong

Now the SNP cannot go into a new referendum without being able to say that Alec Salmond’s lower than Westminster Corporation tax would work, and the rest of the country would pay much the same income taxes and VAT without a far better handle on what Scotland Ltd’s actual turn over is ( ScoGDP) .  Depending on the year GERS varies between 7.4% and 8% allocation of  ScoGDP to UkGDP. Yet we have higher average wages and we have the lion’s share of the North Sea industty off – and on- shore.  However GERS manage to allocate as high as 15.7% of the national UK budget deficit to Scotland, mainly by how they allocate expenditure above Barnett block grant. Or are they missing somethign else out from their revenue equations such as local authority taxes AND incomes ?

I didn’t complete my tax summary for Scotland because I got bored and am neither a tax accountant nor an economist. I stopped when revenues tied with the balance sheet and a deficit or around £13-15bn. Niether did I scrutinise that allocation of Westminster public spending which ends up in Scottish hands directly and not via Holyrood. Nor did I enter the agruments about what Scotland would have to pay for itself in terms of defence, pensions, social security and so on. This is because I am a bit thick and lazy. But also because it gets rather complicated in terms of horse trading between money which is locked into the Scottish economy, or so what if public spending rises as a proportion of GDP if those are jobs in the new armed forces and governmental departments.

Let us keep it simple, stupid. The balance sheet. What does Scotland Ltd turn over, how much does it tax of this turn over, and how much must it borrow or pay off in debt each year?  That is what my last blog was about. This blog is about what could be wrong with GERS.

Exports Are the Fly in the GERS Ointment, The Smoking Gun for  a Bigger ScoGDP

Where have they come up then with this figure of £50bn exports to rUK versus £12.3 bn to EU and why is ROW not in that BBC and other media report for exports from Scotland Ltd?  This is important because the balance of trade is a major economic indicator. Arbitrarily, Rest of World (ROW) exports should be around £13 bn on a per capita basis, meaning that Scotland Ltd exports exactly twice to rUK than it does to anywhere else. Not a surprise, we are an island group of nations with a common language. It is difficult then to disaggregate what these exports are then? How many get sold on and shipped further   out of the UK? How many become major economic components or ingredients of items or services exported outside the UK? I played dirty, I took it as bible BBC figures and then added up the same sources quote on exports to the EU, and then took 8.6% of total UK exports to RoW.

However how was this figure, £50bn, a third of the Scottish economy, deduced and how accurate is this as a figure in itself? Now you can give the estbalishment a stick to beat themselves with as I pointed out, because Scotland has a propensity to export goods. If would take the position that far more than half of this fifty billion rUK ‘export’ goes further in the world to reduce Scotland Ltd to the same proportional balance of trade as UK PLC, which is 30% import as GDP, 20% export for 2015 and as a trend around those figures for some years going back.

If you use exports as a proportional index to work back to total GDP then the worse the balance of trade for Scotland, the more innaccurate the GERS figures for ScoGDP are, and the better the balance of trade for Scotland, the more unlikely the GERS  tax revenue are correct because there is more economic activity in the private sector than the arbitrary allocation of taxes builds up.

Saying this is a proposterous index to take, then means that Scotland Ltd is a very, very different beast from rUK ltd. Firstly it looks like Scotland has a net positive balance of trade, which is extremely healthy for any economy. In turn that is an admission that Macro economic policy for  the financial capital London, and the SE in particular is far out of line with that which will work in Scotland. Or Manchester for that matter.  Secondly it means that Scotland has a higher productivity per worker but this is hidden somehow. Why is this the case though? Because a balance of trade negative means that the country is borrowing more money, and some of that has to be done by the national, central bank to hold up the credit in other banks. This then means that per capita, each worker has reduced productivity because they are working off debt.

That is a kind of a tautology you may say. Yet in reality as we know, a poor balance of trade and high consumer and national borrowing almost brought down modern capitalism in 2008 and it had to go to the tax payer and public pocket to bail it out.

The GDP to taxation ratio is the real over riding key indicator of an economies health in terms of what investors and creditors are looking for. Too high and the country looks like a communist run state, too low and the country is not spending enough on the societal welfare, defence, education and infrastructure. The next related pair of economic indicators are the public sector borrowing requirement, ie the budget deficit and the amount of national debt. These two are inter-related closely but it is not entirely the case that we have a mortgage which just gets bigger, nor the case that the PSBR is a temporary overdraught and national debt is longer term. I am nowhere near to understanding that equation. I like arithmetic. I like sums.

The SNP Are Not Finding the Devil, When It Is There in the Detail

The SNP do not have their sums right then. They cannot go in on a wing and a prayer that all will reveal itself to be shiny and we will balance the books based on current spending and borrowing, while maintaining public spending. However I consider them to be lucky in that the GERS figures are not giving the whole picture. It is true to say that like in the chemical baths of an olden days dark room the picture will develope once the jump is taken. However that will be the economic vagiaries of that period of time in change over.  The SNP have to come with better figures on ScoGDP and real tax revenues, or a fiscal strategy more people can believe in before they go further.

Brexit is More Predictable as a Playing Park than Indy or Not?

Brexit in some ways is less risky than ScotXit fro UK PLC. This is because we know the ‘no deal’  position is WTO, whcih is not the end of the world by any means, and also we have the Swiss- EU , the Turkish to EU and the EEA – EU trade agreements as models for something better than ‘no deal / WTO Default’. However this is then only telling us the costs of trading, not the actual impact on trading, which for Turkey for example has been a positive. It could well be very negative for the UK.

Scotland will be a prize for the EU as post Macron, it starts to reassert its’ raison d’etre and economic security, but only if an independent Scotland is has a robust balance sheet, or can sustain a few years with borrowing to get to a better position. The SNP have not settled this issue of the balance sheet, nor has GERS in my opinion, which should in theory put independence into the category of much higher tax for Scots and lower welfare.

Why is Scotland So Much Smaller An Economy than Comparitive European and Former Colonial Countries? -Because the GERS are Wrong?

I do not believe that scenario of a basket case Scotland Ltd as in the paragraph above. If you take Norway, as Alex Salmond likes to, it has just under twice the Oil production of Scotland, and you could therefore say that GERS are roughtly right because Norwegian GDP is around twice that of Scotland – but 80% of their taxation comes from oil related activities. ( That figure could include a raid on the “oil fund ” by the Norsk chancellor the few last years, I would need to check)

In fact I believe that the Scottish economy is more like 2/3rds the size of the Norwegian economy at around £200bn, placing it around 9 to 12% of UK total GDP. This is because Norway has few other major economic activities outside oil,  apart from fishing and aquaculture, which are net cash earners.

Denmark for example has run with a GDP averaging around about £244 BN for the last decade or so. Why is Scotland with its diversified economy not nearer a figure like this, since it has a much larger oil field than Denmark? Why is it down at £140-£162 bn depending on the year in the GERS figures ?

What about a more recent country which went independent from West Minster and has many similarities to Scotland – New Zealand.  Oddly enough this nation of 4.6 million people had a GDP last year more than GERS allocates to Scotland in most of the last six years, at £155bn.  Yet it has a tiny oil industry and is reliant on agricultural exports and tourism.

So I do not believe in the GERS GDP figures for Scotland Ltd, they are under estimating the size of the economy, and therefore they paint a bleak picture on tax returns, debt and public services. We have that unusually high level of exporting, which paradoxically betters the position for independence which ever way you slice it up with rUK, either in favour of a larger GDP or a much higher productivity per worker. You have other westernised countries  of 4-5 million citizens with bigger GDPs, even without large natural resource deposits. Then you have that me, a motley fool, can recreate the GERS tax revenue estimates on the back of a cyber fag packet, suggesting much of it is allocated arbitrarily per capita, 8.6%.   The SNP have failed to tackle this with real facts or lines of arguments which will point to a more secure future.

 

 

 

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Scottish Independence ? Stop Getting GERS Right

When I left Scotland over a decade ago, both Scottish Independence and any notion of  Auld Blighty really leaving the EU / EEA were far from my thoughts, and seemed both to be rather extreme notions on the fringes of politics.

Having lived in Norway all those years in blissful exile I would now say that I have gone well over the threshold for Scottish independence post Brexit vote, yet I believe the SNP are doing a terrible job at making the economic case for it. The GERS figures have become their own stick to beat themselves with.

Norway by the way,  celebrated 100 years of independence in 2005 and has never looked back from becoming a state in its own right after over 300 years of unions with its’ respective  neighbours. There is something about national pride through thick and thin there, but of course post oil discovery it has become the wealthiest western country per capita.

Comparisons to Norway – Valid? Certainly Illuminating.

Alec Salmond likes to bang on about Norway and he is both right and wrong in that respect. The facts are that Norway has an economy approximately twice the size of Scotalnd – if you compare according to the GERS figures in 2015. With oil revenues being hit hard in both sectors, Norway’s GDP was around £320bn 2015 vs the highest GERS estimate including oil for Scotland at £162bn for 2015.  There is maybe no conincidence then that average wages in Norway are approximnately twice as high at around £52 -55,000.

Which means a pint at around £8 or £9 quid is more affordable than one at a fiver in most London pubs these days. Income tax is not that high for average earners, with MIRAS still in place on in fact all loans, and local authority taxes seem to be a little less than the UK. I pay around about 30-34% of my income and usually have a wage at least half as much again as the UK, withou housing outside the main cities being much more afordable than the UK.

Balance of Trade – The First Smoking Gun in My Detective Story

Norway has a large export surplus that is to say a positive balance of trade. However here we hit an interesting set of figures which I can’t explain when comparing Norway to Scotland using GERS and other BBC/ Better Together sources of statistics.

It is famously reported – in a neutral BBC tone but firmly in the ‘better together’ camp – that Scotland enjoys just under £50bn ‘exports’ with rUK,  with exports from Sco’ to  EU in comparison a paltry £12bn from the same source.

Of course this is misleading because many rUK exports from Scotland include  raw materials and goods and services, which get sold to the EU and ROW. But let us say carry on in that BBC tone of voice and aggregate it all rather than adjust that £50bn downwards.

We then have an economic figure of £62bn if we ignore further exporting and just take it on reciepts. Let’s add tourism, governments own figures, £6.2bn, and because it is importing net cash therefore a “qausi” export- it is foreign consumers and foreign monies in return for something Caledonia does very well by nature.

What about exports ROW though? Let us use some GERS presumed methodology, based on an arbitrary population share of 8.6%,  when extracted from UK Gov’s figures for the whole UK x 8.6%  we get £13.5Bn ROW exports from Scotland.  That guestimate is as valid as very much of the GERS figures which use per capita and oddly enough, ‘geographical’ criteria for arbitrary allocation of worth when it is not glaringly obvious in tax returns or published data. What about Whisky, Salmon and Oil? Do they not move the ROW figures up over too. Does Scotland not export proportionally more produce than rUK? Hmm the plot thickens….

So here is some simple macro economic arithmetic by yours truly- £50bn + £12.3 bn + £6.4bn + £13.5bn  = £82bn, or over half of GDP,  and incidentally more than Norway exports – what is going on then?

A country for which exports account for half (or more) of the GERS stated GDP i.e. its’ whole turnover , its economy-as-we-know-it, and so by default having a positive balance of trade?  ALL of this is based on government and sound economic figures used by UK gov and Better Together. 

Scotland’s Curse of Oil and Gas

Let us look then at Oil – ( and gas, which I will come back to). The figures are astounding in fact, and explain very well why even through the ‘$30 barrel’ shock of 2014-15, fields survived and are still open and (while of course exploration is virtually zero but someone got lucky it seems ). The UK sector still produces around a million barrels of pertoleums a day!

At even three year guesstimated average of $45USD pb over time, that is $16.4 bn per annum, over 95% from Scottish territorial waters. My calculation with today’s exchange rate is £13bn a year, but that is not just any old £13bn, that is primary production, value added supply chain, high wage and mostly exported. It is not money circulating around in cycles or crypto-keynsian private sector stimulus via personal and business credit (debt).

We then have also gas, which it is hard to extract out from the figures on ‘petroleum’   yet Gas in terms of the UK as a whole, is now the single largest source of energy for electricity generation and domestic energy. ( Don’t tell the bloody jocks!). Almost a  third of UK electricity is from gas, and of course lots of folk have gas at home. Now rUK waters produce some gas, but most comes from the N sea and imports from elsewhere, including Russia. It is complicated then to extract this, but if we start pumping CO2 down old oil wells ( Once global warming heats up, no ice age in the next hundred thousand years, sorry boys) then this combined with renewables and nuclear makes Scotland self sufficient and a net exporter of power it is proposed. You go do the sums on gas and ‘leccie, they won’t suit Better Together, especially not when Scottish consumers are being charged more per unit for delivery.

The Trouble With GERS….

GERS figures are a based on estimates, that is stated in every official and public document you will find on them. Estimates. And that is by  Sco Gov and the UK Statistical Authority’s own very clear admission.   They emphasise throughout their literature the apportion of public spending in Scotland and taxation from inhabitants ie per capita,  and ‘ identifiable and attributable activity’ which makes adjustments up and down for known cases, such as N.Sea economics. How much of  ‘ScoGDP’ is arbitrarially calculated and how much is done using more accurate build up methods or other boffin like stats? I can’t find information on this. It is in the realms of the ‘impartial experts’ perhaps, or maybe I am being lazy today.

Tax revenues  are perhaps a hell of a lot easier to calculate accurately for ScoGov and the Scottish Office and the UK Statistical Authority, and who ever esle in UKGov who is involved in the cauldron of statistics. More accurate because ScoGov and UKGov own the figures, they have a census of the populace of tax payers-  but are these tax revenues   based on arbitary allocations per capita or are they not?  Is there not perhaps a bias in reality caused by higher wages north of the border?  –  the North Sea oil industry seems to produce a result where the  average salary is four thousand pounds higher for Scots than rUK. But is that included? That means also a bell curve capturing more higher tax bracket employees? There were in 2013-14 225,000 Oil workers on- and off- shore,

Have they taken this into account with that nasty deficit per capita they like to share, higher per person than rUK? We have then 8.6% of the population, 9.7% of UK tax revenue (inc petroleums) yet 15.7% of the budget deficit? All GERS’ figures not the SNPs’, not John Robertson’s.

Ah but you can wheel out the Barnett Formula. Scots are pampered.  Well in fact Londoners are more pampered, with a higher proportion of total public spending per capita. You have then about £51bn (per capita x 5 million estimate) ‘identifiable’ public spending allocated by the last barnett formula to Scotland, and about £75 bn for London in 2013 figures at 8 million people from the same calculations and sources.  Now look at GERS, which state that Scotland has a deficit in relation to this 51bn of identifiable public spending or 15bn a year. Actual total GERS figures of public spending in Scotland for 2015 were £68.6bn.

Now in Scotland there are an estimated 2.8 million in work, with an average wage of £26k and given a little over a  third goes in income tax and NI from this figure, we get a simple,’  idiotic me ‘ tax income for Scotland of  £25bn , we then can add rates, council tax and council incomes at appx £10bn. So we get to £35bn vs £69bn expenditure before corporation tax, VAT and excise duty.

VAT now, the UK HMRC give a figure to financial year 2017 just ended of £119bn. Now let us be purely fair and arbitrary and allocate 8.6% to Scotland: we get appx. £10bn. So now we are income £45bn versus expenditure of £69bn. We are though, almost covering our tails for the Barnett formula on central funding at that £51bn oh-so-generous figure.

UK Motorists paid in a whopping £28Bn in 2009 in taxes excluding VAT , so we can claim that 8.6% of that, and excise duty on domestic consumption of booze and fags at about £500 million for Scotland, so coming to another £3bn income on our arbitrary round up.  There are other silly wee taxes, airport and so on, let us just ignore them.

What about corporation taxes then?  Well in 2015 they were $44bn which seems a very low figure in comparison to VAT returns, but it is tax on declared profits after all. So we can say that was £4bn for Scotland in a purely arbitrary way. Now we come to £52bn , we have surpassed Barnett but have a deficit to total spending of £17bn. If we take those silly wee taxes then perhaps we have a deficit of £15bn or the high point of GERS figure deficits.

Income Vs Expenditure Then- What is Going On?

Now this was a real back of cyber-fag packet ‘build up’ model and does not take in to account the vagiaries of what Scotland actually gets up to as an economy. Remarkably to me, it comes within a whisker of the GERS figures for that nasty deficit and whole balance sheet on the tax revenue side.

I adjusted only in one area, that being a little for the higher average wages – it could be argued that these are skewed by smaller higher income workers, or conversley perhaps we get a few more % income because more people fall into the higher tax bracket and pay proportionally more due to the high standing of personal tax allowance and lowest rate on the first part of income. I could have missed out some significant portion of employers NI contributions, or taxes in investments, pensions.

Either way we probably get to the arbitrary deficit in the region of 11-15Bn per year over the last five years or so. How much is now being addressed by the new local taxation powers taken up by the SNP and if we had a labour majority in Holyrood you can bet they would do the same,  in the face of central cuts which have the aim of alleviating the deficit for the whole UK.  However is this a true revenue picture or are this there effectively higher productivity in Scotland ?

It comes down more then to that extra attributed £9bn or so monies which are general central government expenditure, allocated to Scotland. This may seem a very small sum, but in terms of what GERS allocated, £69bn, it is in fact 13% of expenditure.  So one in eight pounds spent North of the Border are direct from Westminster not via Holyrood. This includes then defence, international embassies and affaires, EU membership fees, pensions and benefits, pay off national debt –  Wow !! what a super, super deal you may say!

Stop Getting GERS Right!

So playing the idiot savant, with only one minor adjustment for average income, and using figures roundly quoted by Better Together from government sources, I have replicated the GERS figures for revenue within +/- 5%, and I am a motley fool.  This isn’t pure luck though, because I have been through the Lion’s share of UK statistics from UK Gov and the GERS figures and by in large used that 8.6% arbitrary population attribution.

Here comes the rub. The statisticians involved in both Whitehall and Scotland cannot even agree on the allocation of revenue from the North Sea, which industry sources would seem to contradict in that this should be quite definable geographically. We know the amount of and oil and gas per year  and that over 90% is produced in what by any definition currently pre Brexit, would be Scottish continental shelf.  So what chance the rest of that they are getting the rest of the economy right?

In 2016 the UK budget deficit was 3% of GDP.  This would equate to a deficit in Scotland based on the highest Gers figure for ScoGDP,  at £4.86 Bn for 2016, based on the ‘high’ estimate,  including oil income ,  with ScoGDP of £162 bn. However what we are reminded constantly is that per capita deficit is much higher than rUK as shown by GERS. In fact if you look at the figures for 2014-15 then we have been allocated 15.7% of the deficit with only 8.6% of the population. In that year the UK deficit as a percent of GDP was 5.7%.  We see that Scotland has been allocated a formidable 11-15 bn deficit while it is predicted for this year, 2017, to be in the UK as a whole has £51.7bn, which on the lowest allocation for 2017 based on that £11Bn,  means that Scotland has to take 21% of this deficit, on that 8.6% but with that extra Barnet money of £7bn (on a per capita basis vs average for the UK) !

What in fact is going to happen is that the Conservatives have reduced the deficit by good means and foul by £20bn for the budget year 2017, but don’t tell the bloody jocks that their deficit might also be just 5% of ScoGDP therefore being under £10bn for 2017 or 2018.

GERS in A Bubble Show a Heddy Truth Even By Their Own Figures

UK GDP as a whole was estimated at £472 bn ( that is £471, 939 millions) for Q1 2017.   This is seasonally adjusted thus we can say that in a growing economy this year, Annual calendar year GDP will be around £2,000bn. Why has Scotland then not 8.6% of this ?

Instead the GERS figures show we have £20bn less on a purely per capita basis, yet we have a higher average wage than the UK,  and excluding the south east of England, similar unemployment – in employment rates to rUK? Our economy purely based on arbitary per capita is then £172bn this year, which is substantial growth from the low GERS figure for 2015, unlikely to actually be realised if those GERS figures were correct. In other words the economy would need to have grown to meet this arbitrary figure of £172bn from £162 ‘high on oil and gas’ GERS figure for 2016, it would be economic growth of around 6% p.a.

Rather we have had a larger economy than even this £172 arbitrary allocation in my opinion, and this is the key issue with the Gers figures for me- they don’t show ScoGDP in reality and their methodologies are selling us short by using a per capita basis with a minor adjustment for oil. A Scottish economy two thirds the size of Norway’s would seem to make some sense, so I would bet at around £200bn in fact. Let me go away and compare oil production in Norway.

So what is so tragically inconsistent  with Scotland is that the country makes £10-30Bn less in the actual GERS figures than this £172bn  over the last three years on average, calculated from a per capita basis in GDP, while Scotland has a share of the budget deficit at 15.7% of the whole UK.

Is it then the case that the City of London is so very much bigger in the English economy and eclipses us? In which cases surely City figures should be extracted to show true rUK figures, in the same way Oil is often extracted from the Scottish economic figures?  What deficit then has Manchester ? Yorkshire?  Devon?

Scotland – Wealthy And A Primary Producer Par Excellence

Scotland has a high level of primary production and value added manufacturing- there is oil  & Gas and its’ global supply chain here ; there is fishing and aquaculture being the vast majority of UK harvest; theres is a proportionally large agriculture and forrestry industry; a value added food manufacturing industry;  that £6.4bn tourist industry; there is not only whisky but other spirits and brewing, theres biotech and pharma; there is chemicals and there is too petrochemicals like Grangemouth. Then there are less export oriented service industries and construction, but they all count in the GDP, Scotland Ltd’s turn over. The financial sector is an interesting one to say the least.

On expenditure vs revenue then, we can say there is the Barnett block grant plus a net £10bn of local council income, and now a net increase in taxes, the next GERS figures are yet to be fully assessed.  Now we can’t actually spend more than we get, even though some is ‘deficit’ ie public sector borrowed monies. What the £9 bn , over and above Barnett and council taxes and revenue is through central government not via Holyrood as we discussed.

However what is very odd is the governments own figures on exports, which puts Scotland as a net positive balance of trade country versus this not being the picture for the UK as a whole,  thus making the balance of trade case for rUK worse when Sco is extracted. The UK as a whole had a balance of trade in 2015 to the tune of approximately -£200bn, with exports being around about 20% of GDP and imports representing 30% roughly. 

Back to productivity, this means Scotland is less reliant on consumer activity – ie the tertiary economy which was so much of the cause of the financial crisis in 2008 and recessionary conditions after, and low growth and stagnation in many western economies when the national credit card bills just had to be paid down., in both public and private finances.

The fact is that Scotland possibly exports even more of its produce and it is therefore an even larger part of the economy because there is so much primary production, ok, biased by North Sea Oil & Gas as it is at about a third of exports. Now this is good, honest, profitable private business, it isn’t funny money and it isnt retail buying in cheap from China to sell at a margin. Even with the governments own figures and an arbitratry allocation it is half of ScoGDP. I would say that it is more than this, and thus a higher figure due to there being so much primary production and secondary value adding going on, which may then in turn push the entire GDP up and reduce the deficit.

The SNP Have To Get Better Figures

To summarise then, I believe GERS to be potentially flawed in terms of total Scottish GDP and what actual tax revenues can be allocated to the nation, and what the real level of direct central government spending is. It could well be a bleaker, worst case scenario in fact if you want to be a pint half empty person!  GERS may be allocating far too little of general public expenditure from central Westminster /Whitehall sources.

However I just don’t believe in the figures for on the one hand ScoGDP and on the other the level of the deficit, which is kind of a locked cause-effect .  The reality is though there is a deficit and a monster UK national debt which has doubled in a decade and only now may show signs of abating, just in time for the turmoil of real Brexit. Capitalism and the stregnth of the pound are a week to week, quarter to quarter phenomenom looking at results and indicators on the ‘event horizon’ and concentrating on making money rather than sooth saying and doom predicting. International capitalism and trading floors ‘ carry on regardless’ making a quick buck until the roof falls in, as we saw in 2008.

The SNP are making a big mistake by broadly accepting the GERS figures as the most trustworthy source and asking the Scottish public to trust them on the basis that ‘ No one really knows how much money we will get in from tax and what price North Sea Oil will command’ until the time we go independent. In reality they should be arguing for a comparison to rUK excluding the City of London, and arguing that with oil vs city trading in fact Scotland has at least its per capita share with the city and oil in the picture, and a higher per capita if both those are extracted. They should be assuring that in fact, GERS fall short of what ScoGDP really is.

My own wet finger in the air would be that if oil continues to be £55USD pb then Scotland makes for 9-12% of the whole UK economy, and is by far the most productive region outside London in terms of exports per capita. That is wishful thinking more than even opinion you may say.  But given we have North Sea oil & gas in our GDP then surely we are more than 8.6% of UK GDP, and not as low as just under 8% as GERS indicate?

Pro independence folk or those who are just on the fence and  a little concerned, the floating Labour voter who knows they are getting 10 years more of conservatives in Westminster, should be asking the questions about GERS. It seems that they are ‘accurate and impartial’ in that the tax revenue is based on hard figures and per capita arbitrary allocation, as how else would I come so close in a ‘build up methodology’ to their revenue figures? However how are they calculating or building up GDP for Scotland? The clues that it is potentially higher are – employment rates, higher average wages, exports amounting to half the GERS figure GDP.

Exports are a good index to smoke out the ‘impartially didn’t see that’  in GERS allocation of ScoGDP because as a whole the UK economy exports between 25 and 30% of GDP in any given year.  Now of course some of Sco-rUK “exports” , remember that £47bn – £50Bn we should be so grateful for,  are re-exported or have value added to them and are then exported from rUK.  Including tourism we have in fact exactly 50% of our economy as exports – £81bn exports and GERS top figure ScoGDP £162bn. So it is very, very odd that Scotland has so much higher a % exports, given that rUK plus EU plus ROW (the last one being my estimate, it could be higher than arbitrary % share of UK per capita,  and IMHO probably is) . In 2015 the UK as a whole exported £425 bn, which was about 25-30% of GDP. However it imported £606 Bn

We could then use this indicator index of exporting and say that in fact Scotland is not so weird and exports more in line with rUK. We can then tramp it down to exports at 40% GDP because oil, gas and electricity are so large. We can then exclude tourism for the sake of complying.  Then we can back calculate ScoGDP as being £187bn for 2015, as against GERS ate £162bn. The figure if I remember right was that Scotland tax revenues were at 34% GDP, so we get a third of this back in taxes this being £8.3bn, and reducing the deficit, the national bridging loan on the mortgage, by more than half.  Now if exports are taken at the same level as UK as a whole, 30%, then this makes ScoGDP higher because those hard figure exports are a smaller proportion of ScoGDP.

1705 -1707 All Over Again?

This is a major line of argument for Brexit and against ScoIndy- does Scotland want to risk those £47bn-£50bn rUK exports? Does Germany want to risk those BMW sales? Italy those Gucci sales?

This is a simplistic, childish argument which appeals to unfortunately, the Brexit -Leave voter demographic. In reality it is rUK and UK Ltd who are dependent on imports to make their economy go round. The exchequer gets more margin out of those Gucci shoes in VAT and more in life cycle from those highly taxed, full-service-history BMWs than they do in Bayern!

In terms of fresh scottish food produce, oil&gas, chemicals and not least electricity, rUK are dependent on these for their supply chains and to be able to add value for export further a- field or just do retail and services domestically.

However this is being dressed up now as a 1705 proposition, with a near ‘bankrupted’ new state being held over a barrel once again with its’ beef exports being denied a market. That is currently exactly how spiteful the Tories are in fact, but any independence will be after Brexit and the shock to supply chains in Brexit will mean a possibly gentler negotiation with a new, pre-EU state as a major supplier and business partner.

The folly of going with a ‘no deal’ or obstreporous Brexit deal with the EU will be more apparent as soon as supply chains are disrupted and many of those cause celebres, the farmers and the fishers, find that the EU was their easiest and most important export market. Trade deals with China and India are the great white hope, but these will be done behind close doors and full details may be withheld from the public until they are signed. So much for more democracy.  Brexit is the real cause of IndyRef II, and I hope the timing is right such that the effects of Brexit and the arrogance of the Tories become fully apparent to the Scottish public.