Scotland’s fiscal gap narrows as revenue rises faster than spending

DE demoduck.co.uk editorial team 2026-08-12 16:54 3 min read

Scotland’s notional net fiscal balance improved by £0.6 billion in 2025-26, but public expenditure still exceeded revenue by an estimated £25.3 billion.

The figure, published by the Scottish Government in its Government Expenditure and Revenue Scotland (GERS) statistics, is equivalent to 10.9% of GDP. That was down from 11.5% a year earlier, while the UK-wide deficit was estimated at 4.2% of GDP.

The improvement reflects revenue growing more quickly than spending over the year. It does not mean Scotland recorded a budget surplus: the Net Fiscal Balance remains the difference between money raised in Scotland and expenditure undertaken on behalf of people in Scotland under current constitutional arrangements.

The headline figures for 2025-26

Revenue increased by £6.3 billion, or 6.9%, compared with the previous year. Expenditure rose by £5.7 billion, or 4.8%. Because income increased by more than spending, the estimated fiscal gap narrowed.

£98.3 billion raised from Scotland

Public sector revenue collected from businesses and people in Scotland totalled £98.3 billion, representing 8% of all UK revenue. Of that total, £27.8 billion was devolved revenue, accounting for 28% of revenue raised in Scotland.

Revenue per person was estimated at £17,718, almost identical to the UK average of £17,720 when North Sea revenue is included. That comparison matters because North Sea revenue is counted in the Scottish estimate, but it does not by itself settle wider questions about how future revenue or spending would change under different constitutional arrangements.

Spending rose most in health and social protection

Public sector expenditure on behalf of people in Scotland reached £123.6 billion. The largest annual increases were in social protection and health, according to the GERS release.

This spending measure includes services funded by both devolved Scottish institutions and reserved UK government functions. It is therefore broader than the Scottish Government’s own budget and covers expenditure attributed to Scotland across the public sector.

Spending per person was £22,281 in Scotland, compared with £19,561 across the UK. The difference was £2,720 per person in 2025-26.

How Scotland compares with the UK

Scotland’s estimated deficit of 10.9% of GDP was more than twice the UK figure of 4.2%. The comparison shows that Scotland’s fiscal gap narrowed over the year, but remained larger relative to the size of its economy than the UK-wide deficit.

GERS is an Accredited Official Statistics publication. The figures are produced independently of Scottish Ministers and are assessed against the UK Statistics Authority’s Code of Practice for Statistics. They are designed to describe revenue and spending under current arrangements, rather than predict future budgets or establish what fiscal outcomes would be under another constitutional model.

For households, the release provides a national picture of the taxes raised and public services funded on Scotland’s behalf. It does not identify a direct change to an individual tax bill, benefit payment or public-service entitlement.

Source: Scottish Government News

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Source check How these figures were checked

This report uses the Scottish Government’s GERS release and distinguishes the annual improvement in the fiscal gap from a budget surplus.

Checks

• Checked the reported £25.3 billion Net Fiscal Balance against the stated 10.9% of GDP.
• Checked that revenue rose by £6.3 billion while expenditure rose by £5.7 billion.
• Checked the Scotland and UK deficit comparison: 10.9% versus 4.2% of GDP.
• Checked that the publication covers devolved and reserved public-sector spending.

Scottish Government News Check related coverage

Source

Scottish Government News

Scope

Scotland

Updated

2026-08-12 16:54

Report

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