Scotland has a serious oil problem.
In the run up to the 2014 Scottish independence referendum, many ‘Yes’ voters cited Scotland’s North Sea oil reserves as a reason the country could easily survive without being part of the UK.
Those people aren’t saying that anymore. In the last financial year, Scotland’s public spending was £14.9 billion more than its tax revenues, according to a report by the Government Revenue and Expenditure Scotland (GERS).
To make matters worse, Scotland’s national deficit is now twice the size of the UK’s, with total government spending on Scottish citizens £1,400 higher than the UK average.
So how did this happen? Quite simply: the SNP didn’t see the oil price crash coming. At the beginning of 2014 they budgeted on oil staying above $100 a barrel — now it’s under $40.
This chart shows how drastically Scotland’s oil revenues have fallen in the last five years:
Scotland’s total tax revenue for the last financial year was £53.5 billion. While oil was once seen as the jewel in the country’s economic crown, at current prices oil accounts for barely 4% of Scotland’s total income.
Last September the industry felt the pinch of declining prices when 65,000 jobs directly and indirectly involved in North Sea oil were “stripped out”, taking the number of employees down from 440,000 to 375,000. Unless oil prices improve soon, that workforce is liable to diminish even further.
The declining oil revenues also raises questions about Scotland’s place if Britain decides to leave the EU in a referendum on June 23. The SNP has made it clear it would call for another Scottish independence referendum if Brexit does take place, but these figures will make their challenge to leave the UK significantly more difficult.