The most interesting figures I have seen so far in all the noise of the Scottish independence debate come from the Government Expenditure & Revenue Scotland report for 2011-12 (the latest figures available). This report compares the effect of various approaches to splitting oil revenues. It does, being a Scottish report, focus on the impact on Scotland. However, extrapolating from their published figures, the impact on the rest of the UK are just as interesting.

Scotland and oil

The net borrowing in the Public Sector Accounts for the UK as a whole is shown in blue at the bottom next to the Scottish position with no oil revenues, with the deficits of an independent Scotland and the rest of the UK shown both in £ billions and as a percentage of their respective GDPs above under two separate scenarios. One assumes oil revenues are split per capita, the other that they are split by geographical share. I have assumed no change to economic activity in the UK as a whole due to independence, an assumption I admit may be shaky but for which I have seen no authoritative alternative to date.

On this basis, the rest of the UK’s deficit in 2011-12 as a percentage of its GDP would be 7.7% with a per capita split and 8.5% with a split by geographical share, compared to the 7.9% of GDP for the UK as a whole in the Public Sector Accounts. So one measure increases the rest of the UK’s deficit as a proportion of GDP (the approach the Scottish National Party prefers) and the other reduces it.

That is presumably why it was worth the UK Government relocating to Aberdeen for today’s cabinet meeting to discuss the future of the oil industry. There is a lot at stake.

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