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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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The devolution of various welfare powers to Scotland has led to speculation as to what a Scottish benefits system might look like. However, analysis from David Bell suggests that Holyrood may struggle to meet the bill for existing benefits in future years, let alone new ones. 

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The Chancellor has used the Budget to limit the Scottish Government's room for manoeuvre, say David Bell, particularly through changes to Corporation Tax and the National Minimum Wage.
 
Once again, George Osborne has proved himself to be a clever politician.
 
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The Scottish Government's new capacity to borrow is a vital, if little-discussed, power. However, says Angus Armstrong, the details of how this will work may have been dodged by the Smith Commission but cannot long be avoided by the Scottish Government and HM Treasury. 
 
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What’s the fuss about austerity?
 
Is all the concern about austerity misplaced? The latest labour-market statistics published on Wednesday contained more good news. There was another increase in the employment rate, in both Scotland and the UK. Scotland’s 74.4% employment rate is at an all time high. The economic inactivity rate has fallen and is at a historic low.
 
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