The oil collapse in the North Sea has negatively affected the Scottish public spending deficit, which stood at £14.8 billion in the last financial year.
According to figures released by the Government Expenditure and Revenue Scotland (GERS), Scotland’s share of oil revenue from the North Sea decreased by 97% from 1.8 billion in 2014/2015 to £60 million in 2015, a result of plummeting oil revenues from the North Sea.
“The lower oil price has, of course, reduced offshore revenues, with a corresponding impact on our fiscal position. However, Scotland’s long-term economic success is now being directly threatened by the likely impact of Brexit,” Scottish First Minister Nicola Sturgeon said in a GERS report.
Oil Collapse Slams Scottish Revenue Down 97%
“The foundations of our economy remain strong. Scotland, in terms of economic output per head – and even excluding offshore revenues – remains the most prosperous part of the UK outside of London and South-east England,” she added.
According to the report by GERS, Scottish North Sea GDP declined by 24% in 2015-16.
Aerial View of the Aberdeen Harbour
This downfall in North Sea revenue and GDP is a result of “relatively high operating costs and falling prices”, the report states.
Additionally, in 2015, Scotland’s structural deficit was more than twice the UK’s structural deficit, following the collapse in North Sea oil tax revenue, falling from £1.8 billion in 2014 to £60 million.
Demand and Prices Continue to Impact Offshore Revenue
“Today’s figures do, however, highlight the challenges facing the oil industry. Muted global demand and a low oil price have clearly had an impact on offshore revenues – not just in Scotland – but we are doing all we can within our powers to support the industry,” Cabinet Secretary for Finance and the Constitution, Derek Mackay, said.
Overall, the GERS data puts Scotland’s net fiscal deficit for 2015 at £14.8 billion, including North Sea revenue.
The figure is £522 million higher than in the previous year, equivalent to 9.5% of Scotland’s GDP.
Over the same period, the UK’s estimated deficit was of 4% of the GDP.