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London reviews Scottish oil and gas claims

Sept. 4, 2013 at 7:11 AM   |   Comments

LONDON, Sept. 4 (UPI) -- The Scottish economy might not be able to rely on oil and natural gas revenues as much as it anticipates, a report from the British Treasury Department said.

Scotland is scheduled to hold a referendum on independence from the United Kingdom next year. A government report in May said "a strong onshore economy and vast offshore potential" means there might be enough oil and natural gas revenues to go it alone.

A 142-page report published Tuesday by the British Treasury Department said decoupling from London would expose an independent Scotland to risks.

"The U.K.'s broader and more diverse tax base helps maintain the stability of public spending in Scotland and smooth the impact of volatile sources of revenue, such as North Sea oil and gas," the report said.

The report said the Scottish economy can find strength in its energy sector, but it's a vulnerable sector that can have a "significant impact" on Scotland's economy performance from year to year.

The paper estimated the oil and natural gas industry contributed about $39.5 billion to the gross domestic product in 2011.

The British report, however, said integration means Edinburgh is shielded from major economic calamities, like the global financial crisis that began in 2007.

"In the event of independence, the allocation of North Sea oil and gas revenues would be subject to negotiation," it added.

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