Fiscal freedom for Scotland would mean spending cuts, tax rises - think-tank
LONDON (Reuters) - Scotland would have to make "substantial" spending cuts or increase taxes if the Scottish National Party (SNP) gained full control of the country's finances after next month's general election, the Institute for Fiscal Studies said on Tuesday.
On Monday, the SNP launched their manifesto ahead of a knife-edge vote in which neither Conservative Prime Minister David Cameron nor Labour's Ed Miliband are expected to win a majority - an outcome which could see the nationalist party team up with Labour to form the next government.
Alongside plans for higher public spending and an end to austerity, the SNP manifesto set a medium-term ambition for Scotland to be granted full fiscal autonomy - control over all its tax and spending. The SNP's longer-term aim is for Scotland to gain full independence.
But independent economic think tank the Institute for Fiscal Studies - a respected body whose research is frequently cited by politicians of all parties - said on Tuesday that fiscal autonomy could leave Scotland facing a growing gap between its income and spending.
"Full fiscal responsibility would likely entail substantial spending cuts or tax rises in Scotland," said senior IFS economist David Phillips.
The report used projections based on the latest available official data to show Scotland could face a 9.7 billion pound shortfall by 2019/20 under fiscal autonomy compared to current arrangements.
"While a big and sustained rebound in oil revenues or significantly higher growth in Scotland could mitigate this, there can be no presumption that either would occur," Phillips said.
(Reporting by William James; editing by Stephen Addison)
