Unreliable forecasts
In the BBC Shetland debate, once again, the local Better Together discussed an IFS (Institute for Fiscal Studies) report from last November as if it were indisputable fact.
It is merely an economic forecast based upon a modelling tool full of assumptions, some of these from the unreliable Office of Budget Responsibility (OBR).
The only certainty is that like most economic forecasts, it will prove to be wrong.
The report, itself, contains the following health warning: “Producing a projection for UK revenues and spending is inherently difficult and a number of judgements and assumptions must be made…” and further states: “Trying to carry out a similar exercise for Scotland introduces further complexity…”
The Office for Budget Responsibility’s economic forecast for 2010 predicted that tax receipts would be £661.9 billion in 2013/14 and these turned out to be only £607.7 billion which is a £54 billion shortfall[1].
This proves that all tax receipts can be highly volatile as the shortfall attributable to North Sea oil tax only accounts for £4 billion of the gap.
The UK filled this gap through austerity measures that are hitting the poorest and disabled hardest and more Government borrowing that totalled £93.7billion in 2013-14[2].
To put the £6 billion projected annual deficit for Scotland from the IFS report in context, £6 billion is how much the UK is currently borrowing every 23 days or alternatively is how much debt interest the UK pays in just seven weeks[3].
One aspect of the IFS report that Better Together do not discuss is that the report forecasts that the UK will remain in austerity for 50 years.
Brian Nugent
Chair
Yes Shetland
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