The Scottish government released the latest Government Expenditure and Revenues Scotland (GERS) for 2010-11 this morning. This provides new estimates for Scotland's current balance and net fiscal balance under various assumptions. The new data allow the table provided in the previous post to be updated to 2010-11. My calculations for the new table are here
Alex Salmond's figure that purportedly shows how much stronger the Scottish budget is compared to the UK budget rises from £7.2 billion to £8.6 billion. Remember what this figure is. It is the difference between Scotland's actual fiscal deficit - from GERS - and the fiscal deficit that Scotland would have had if it had adopted the UK fiscal policy stance during the period in question.
So, Scotland now has more money today for an oil fund than we had yesterday in the First Minister's letter to the Scotsman?
I don't think so.
Over this latest five-year period Scotland would have had to borrow £35.3 billion to balance its books. That is an increase in Scotland's debt to GDP ratio of 25 percentage points over the five years - using 2007-08 GDP including oil as the midpoint year. Borrowing a further £8.6 billion to set up an oil fund, or reduce taxes, or raise spending, would add an additional 6 percentage points to the debt to GDP ratio indicating an increase of 31 percentage points in the debt ratio over the five years.
This might be how an oil fund is set up in the First Minister's dreams but on these figures that's what an oil fund is: a dream. Unless, of course, taxes are raised and/or public spending is cut to finance it.