Scotland’s net fiscal balance has improved since last year, driven by record North Sea revenue, as well as strong growth in income tax, national insurance contributions and VAT. Although there was a reduction in health spending related to the pandemic, overall spending increased, primarily due to increased spending on reserved debt interest and the introduction of cost of living support. 

Net Fiscal Balance 2022-23

This is the difference between total revenue and total public sector expenditure including capital investment. The net fiscal balance:

• was a deficit of 9.0% of GDP (£19.1 billion)
• when excluding the North Sea, was a deficit of 15.1% of GDP (£28.5 billion)
• for the UK, was a deficit of 5.2% of GDP

Total Public Sector Revenue 2022-23

• Scottish public sector revenue was estimated at £87.5 billion (8.6% of UK revenue). Of this, £9.4 billion was North Sea revenue. Scottish non-North Sea revenue was £78.1 billion (7.7% of UK revenue)
• non-North Sea revenue increased by £8.1 billion in 2022-23, an increase of 11.5%, as in particular income tax, national insurance contributions, VAT and non-domestic rates grew strongly
• Scotland’s illustrative geographical share of North Sea revenue was £9.4 billion in 2022-23, up from £2.4 billion in 2021-22, following the introduction of the Energy Profits Levy

Total Public Sector Expenditure 2022-23

• total expenditure for the benefit of Scotland by the Scottish Government, UK Government and all other parts of the public sector was £106.6 billion. Spending increased by £9.3 billion (9.5%), reflecting increases in reserved public sector debt interest payments, which are linked to inflation, and the introduction of Cost of Living support