Scotland continues to enjoy higher average spending on public services than other parts of the UK, according to the latest annual assessment of the nation's finances. The report, known as GERS, estimates the difference between what Scotland raises in taxation and what is spent on public services, known as the net fiscal balance or notional deficit.
Record spending gap
In 2025/26, Scots received a record £2,720 per person more in public spending than the UK average, an increase of £51 on the previous year. The tax shortfall – the difference between revenues raised in Scotland and the cost of running public services – reduced slightly to £25.3 billion from £26.2 billion the year before.
As a percentage of GDP, Scotland's deficit is 10.9 per cent, down from 11.6 per cent, compared to the UK's 4.2 per cent.
Revenue growth drives improvement
The improvement reflects revenue growing faster than spending. Total revenue raised in Scotland rose by £6.3 billion (6.9%) to £98.3 billion, while expenditure grew by £5.7 billion (4.8%) to £123.6 billion. Income tax, which Holyrood controls, provided an extra £1.5 billion.
Finance Secretary Jenny Gilruth, appointed in May, said: "The significant increase in income tax revenues shows that the decisions which this Government has taken are helping to deliver additional funding for measures to ease the cost of living like the Scottish Child payment, free prescriptions, bus travel for under-22s and free university education."
Why the gap exists
Scotland is not the only home nation with higher spending than the UK average. Northern Ireland comes top, followed by Scotland, then Wales. This is partly because it is more expensive to provide public services like the NHS in the Highlands and islands than in densely populated urban areas.
The Labour Government argues this shows Scotland benefits from being part of the UK. Scottish Secretary Douglas Alexander said: "By pooling and sharing resources across the country, people living in Scotland benefit from significant additional public spending. That means £2,720 more per person compared to the UK average, which the Scottish Government can spend on vital services like schools, hospitals and transport."
Independence implications
The figures represent Scotland's economic position within the UK. SNP ministers argue that different economic choices would be taken under independence. Gilruth said: "GERS provides notional estimates for Scotland’s deficit as part of the UK – it simply does not show what an independent Scotland’s position will be. With the powers of independence we would be able to chart a different path, ensuring we grow the economy to allow Scotland to reach her full potential."
The report does not explain how the deficit would be plugged under independence.
