Scotland's deficit hits 9.5% of GDP as North Sea revenues slump
Scotland's dependence on tax revenues from the North Sea oil industry has been exposed, as new figures reveal that North Sea oil revenue plunged by 97% over the last financial year, leaving a £14.8bn hole in Scotland's finances, representing a deficit of 9.5% of GDP. The UK Government's Scottish Secretary, David Mundell, suggested it could have been far worse for Scotland if it had split from the UK in the 2014 independence referendum; the overall UK deficit is just 4% in comparison.

The Scottish government's revenues from North Sea oil and gas collapsed by 97% to just £60m in the last financial year, according to new figures that have been seized on by pro-union politicians.

Receipts from the industry collapsed from a level of £1.8bn in 2014/15, according to the Government Expenditure and Revenue Scotland (GERS) data, amid a dive in the oil price.

It is a far cry from 2008/9 when Scotland's share of North Sea revenues peaked at £11.6bn.

The latest figures showed that Scotland's fiscal deficit - the gap between spending and borrowing - rose from £14.3bn to £14.8bn.

That represents 9.5% of Scottish gross domestic product (GDP) and compares to a UK deficit of £75.3bn which represents 4% of its GDP.

UK-wide figures published earlier this year showed that oil and gas revenues had collapsed to a record low for 2015/16. Scotland's share accounts for more than three-quarters of those receipts.

Image: North Sea revenues since 1998/99

The big fall is partly explained by tax rebates to the industry, which has been hammered by the global oil price slump, shedding thousands of jobs. The Government has introduced tax breaks to try to alleviate the pressure.

The price of a barrel of Brent crude has fallen from $115 in summer 2014 to around $50 today.

David Mundell, the UK Government's Scottish Secretary, said Scotland has weathered the slump in oil revenues because it was "part of a United Kingdom that has at its heart a system for pooling and sharing resources across the country as a whole".

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Nicola Sturgeon, Scotland's First Minister, said: "The foundations of our economy remain strong" but that the fall in offshore receipts showed the importance of growth elsewhere.

She said the country's long-term economic success was being "directly threatened by the likely impact of Brexit".

The UK-wide referendum decision to leave the European Union has revived prospects that the SNP administration will go for independence, after a majority of Scottish voters opted to stay in the EU.

But Scottish Labour leader Kezia Dugdale said: "Today's figures should act as a reality check for those calling for another independence referendum."