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The campaign for the Scottish Parliament election of 2016 has lacked the energy and enthusiasm of #indyref1 or the general election of 2015. The winner has been known from the start – and long before. Most commentators have focussed on who comes second and becomes the official opposition in Holyrood.

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Scotland's fiscal framework: Assessing the agreement

The Smith Commission Agreement, published on 27 November 2014, set out proposals for substantial fiscal devolution to the Scottish Parliament. The Scotland Bill – due to receive Royal Assent shortly – will enshrine these powers in law.

The recent GERS figures for Scotland’s fiscal balance in 2014-15 were entirely predictable. For the first two quarters of that financial year, oil prices averaged around $100 per barrel. Revenues from North Sea oil were flowing strongly. During the next two quarters, the oil price averaged around $50 per barrel and revenues stalled.
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In headline terms, the Spending Review looks little different from the public finance forecasts in the summer budget. The Government will achieve a fiscal surplus by the end of this parliament (the first time that this has been achieved since 2001). And total public spending as a percentage of GDP will fall from 40% currently to 36%.
 
But Osborne has managed to achieve this whilst simultaneously being more generous on the spending side.
 
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The Scottish government’s block grant allocation between 2015-16 and 2020-21 was set in the 25th November spending review delivered by the Chancellor of the Exchequer. Current spending will increase from £25.9 billion now, to £26.5 billion in 2019-20. This represents a 5% real cut (equivalent to £1.3 billion). In contrast, due to the UK government’s decision to increase capital spending by £12 billion compared with its plans last July, Scotland’s capital budget will increase from £3 billion to £3.5 billion by 2020-21, an increase of around 10% in real terms.
 
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