HM Treasury today released the fifth paper in its Scotland analysis series, revealing that as a result of being part of an integrated UK, Scotland is outperforming most other parts of the British Isles.
Scotland benefits by being incorporated in the economic integration with the rest of the UK by having free access to the larger UK market. This enables Scottish companies to trade more goods and services with the rest of the UK than with the rest of the world.
Integrated supply chains also result in Scotland exporting GDP36bn of goods and services to the other parts of the UK. In addition, a common regulatory framework and a highly flexible labour market allows Scottish businesses to recruit the best people from across the whole of the UK. Labour migration between Scotland and the rest of the UK is estimated to be as much as 75%, which allows the sharing of skills and knowledge.
The paper shows that the stability of public spending in Scotland is helped by the broader and more diverse tax base of the integrated UK and that Scotland is protected from economic shocks and the volatility of North Sea oil and gas prices.
Today, deeds have been unveiled by the Chancellor that will give the oil and gas industry long-term certainty on the tax relief they will receive from decommissioning.
The analysis also shows that since 1999, Scotland’s onshore economy has generated 8.3% of the UK’s tax receipts and Scotland has received an average of 9.4% of UK public spending.
Chancellor to the Exchequer, George Osborne, said: “Scotland benefits from being a strong part of the UK, and the UK also benefits from Scotland’s place within it. Today, I’m unveiling the final decommissioning deed. This is a concrete example of the tax certainty this government is providing. The industry estimates that this decommissioning certainty will drive at least GBP17 billion of increased investment, extending the life of the North Sea basin.”