The whole topic of Brexit has caused a lot of confusion and uncertainty for people all across the UK. Whether you’re for or against, there’s a lot of questions that need to be addressed. One sector that is of particular concern to many in the financial industry is Scotland’s debt epidemic.
Did you know that Scotland has nearly £15 billion of debt, and this deficit is nearly twice the size of UK debt (excluding Scotland), when taken into consideration? Official figures published in recent years have affected one of the key arguments by the SNP that favour national independence.
For the first time in more than 35 years, figures have shown that Scotland has generated lower tax per person when compared to the rest of the UK. Although there isn’t a significant difference, the change is important because former Scottish National Party leader Alex Salmond has previously stated that Scotland’s higher tax receipts should support the push for independence, this was during the 2014 referendum campaign.
Political opposition of the SNP stated that the Government Expenditure and Revenue Scotland figures were published two weeks before the date of the country being independent if it had voted to leave the Union, showcase how “devastating” a ‘yes’ vote would be.
The figures outline the effect of decreasing North Sea oil revenues on Scotland’s finances display that Scotland’s deficit reached £14.9bn in 2014/15, an increase of more than £1.5bn compared to £13.4bn from the previous financial year.
These figures account for 9.7% of Scotland’s GDP, when compared to that of the overall UK deficit of 4.9% of GDP.
Scotland raised less tax per person in comparison to the UK average, and spent more than £1,400 per person compared to the rest of the UK as a whole.
• Scotland tax spend per person: £12,800
• UK average tax raised per person: £11,400
These stats are often used to fuel debates about Scotland’s potential for becoming independent from the rest of the UK.
Although this considers public sector debt, many households are still concerned about consumer debt within the financial industry. With Scotland’s debt potentially rising to £50bn by 2020, this will be an alarmingly high record.
High consumer spending has led more and more individuals to turn to personal loans, pay day loans, credit cards, store cards, catalogues, and larger overdrafts than ever before. For those in council tax arrears, they may be faced with a bank account or wage arrestment.
The uncertainty around Brexit may leave more people in a potentially difficult financial position, as they may find it difficult to manage their current debt. This will also affect businesses within Scotland too.
Debt is collected through a number of different ways in Scotland, in most cases, a debt collection agency will attempt to recover it, county court judgements as well as other legal action taken is another option. However, for some individuals or businesses, a bank account arrestment or wage arrestment (also known as an earnings arrestment) is another option that shouldn’t be taken lightly.
Arresting a bank account may mean an individual or business has restricted access, due to it being frozen. A wage arrestment can be used to directly contact a client’s employer and request that a certain percentage automatically be deducted to cover the unpaid debt. This process will continue until the debt has been paid in full. Unfortunately, with everyday living costs rising year over year, the amount taken could be problematic and place someone in financial hardship. For this reason, it’s worth speaking to a wage arrestment expert.
Scotland’s First Minister, Nicola Sturgeon has stated that “the foundation of Scotland’s economy are strong”. Later at a briefing, once official figures had been publicised, she did admit that they show “deterioration” when thinking about the country’s financial situation, this was due to the significant decrease in oil prices at the time.
Nicola Sturgeon stressed that the figures must be looked at “in context” before making any conclusions. She went on to say “No country anywhere in the world looks at its fiscal position and makes judgements about it based on one year’s figures. Over the past ten years, the reality is that Scotland’s fiscal position has been broadly similar to that of the rest of the UK.”
Opposition parties have stated that these statistics show that Scotland would face a very challenging future if it had voted to leave the Union 18 months prior, they continued to accuse the Scottish National Party of overestimating valuations of North Sea oil, as an attempt to persuade the public back to pro-independence.
Scottish Conservatives’ finance spokesman, Murdo Fraser stated that “Had their con succeeded, we would now be only 15 days away from separating the most successful political Union in history in favour of a leap into the dark”.
Scottish Labour leader, Kezia Dugdale said that “These figures from the SNP Government show once and for all the devastating impact leaving the UK would have had on Scotland’s finances… People were misled by the SNP in the run-up to the referendum and that is unforgivable.”
Nicola Sturgeon has said that she would take an “opposite view” and identified that Scotland has contributed £300bn in North Sea oil revenues to the Treasury. She also questioned why UK Government has not developed a Norwegian style oil fund to protect the oil industry in difficult times.
“What we are talking about here today is – certainly at least in part – an indictment of the mismanagement by the UK of Scotland’s finances and our oil revenues in particular,” Nicola Sturgeon.
Scottish Government has an annual budget of around £30bn, but this amount is not enough due to a spending spree on schools, roads, railways, higher education and hospitals.
A Scottish Government spokesman added that “Public sector debt and affordability are key responsibilities for all the public sector. The Scottish Government is committed to sustainable levels of public sector debt – our approach is to use revenue funded methods of investment at a sustainable level while not overly constraining our choices in future years.”
As we find out more, we hope to keep you updated on Brexit related news and the UK economy as a whole.