How Scotland will be disadvantaged in the longer term by recent changes in government accounting for European structural funds

Cuthbert, Jim and Cuthbert, Margaret (2007) How Scotland will be disadvantaged in the longer term by recent changes in government accounting for European structural funds. Quarterly Economic Commentary, 31 (4). pp. 41-48. ISSN 0306-7866

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Abstract

In 2006, the Treasury reclassified the way in which receipts from the EU are handled in the UK government’s public expenditure control system. This was intended to be a purely technical change, whose impact would be budgetarily neutral. We show here that, as regards Scotland, this will not be the case. Both the Treasury and the Scottish Executive have failed to accommodate the fact that receipts from European structural funding in Scotland have always been handled in an anomalous fashion. The interaction of the reclassification with the way in which EU receipts were handled in Scotland, combined with the planned reduction in Scotland’s allocation of structural funds in the 2007-2013 round, means that Scotland will be materially disadvantaged financially in the longer term.

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