It is getting on for four years since Scotland voted to remain part of the UK and talk of a second referendum has gone a bit quiet. The latest figures outlining the state of the country’s public finances help explain why.

Scotland’s budget deficit – even including a share of revenues from the North Sea – remains high and, at almost 8% of gross domestic product, is four times as big as that for the UK as a whole.

The reason Scotland’s deficit is higher comes down to two factors: tax and spending. Its revenues are just over £300 per head lower than for the UK while its spending is more than £1,500 per head higher.

At present, talk of a fiscal black hole is so much political hot air. Scotland’s budget deficit is entirely notional as long as it is part of the UK. But it would become relevant in the event that a second referendum threw up a different result.

Let’s be clear. Many small countries thrive as independent entities and there is no doubt that Scotland could be one of them. The strength of the finance, food and drink and renewable energy sectors means its onshore economy is relatively diversified. But it would be tough going at first.

Options for dealing with the deficit would be limited. It would make a difference if Scotland received all the revenues from the North Sea rather than just a slice of them, but the chances of London agreeing to this as part of any divorce settlement are slim. Raising personal tax is never popular, and since Scotland would be looking for inward investment a government in Edinburgh would be wary about upsetting business. Spending cuts are an alternative but an equally unattractive one.

A Scotland that remained inside the EU could ask European taxpayers to pick up the tab, but that is never going to happen given the EU’s small and constrained budget. Edinburgh could decide to ignore the deficit and carry on spending regardless, although the record of small countries that have tried this approach is not altogether encouraging.

Ultimately, the only realistic way for Scotland to enjoy the levels of spending it currently enjoys is to raise the economy’s growth rate. That would require supply-side changes to boost investment in physical and human capital. But it would also mean ditching the ideas of sticking with the pound or joining the euro and instead running an independent monetary policy. There seems little appetite, though, for such a radical option.

No big deal over small change

The campaign to save the 1p and 2p coins was swift and easily won. Barely had the Treasury floated the idea in this year’s spring statement than the government was making it clear there would be no change in Britain’s coinage.

The former top permanent secretary at the Treasury, Sir Nicholas Macpherson, got awfully worked up. It would, thundered the retired mandarin, be trashing 1,000 years of history. Britain would be sending out the message that it was a banana republic.

All this was well over the top. It was not the end of civilisation as we know it when the farthing went out of circulation in 1960 or when the halfpenny stopped being used in 1984.

The increased use of contactless payments for small transactions means that the smaller denomination coins are being used less and less frequently. As the Treasury noted in its consultation document, six out of 10 1p and 2p coins are used only once. They are then either stuck in jars, find their way down the back of the sofa or are lost altogether. Fewer and fewer of them are being minted.

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What’s more, the argument that scrapping the 1p and 2p coins would lead to higher inflation because retailers would round up prices does not really stand up to serious scrutiny, as two Bank of England officials have shown in a blog.

Marilena Angeli and Jack Meaning note that rounding only applies to cash payments, which account for 3% of spending by value; that the number of prices ending in .99 has dropped and accounts for only 12% of the total; and that countries that have got rid of low denomination coins have moved to a system that rounds up the final bill rather than individual items.

There are reasons to be careful about abolishing the 1p and 2p coins – the possible impact on charities, for example, but the effect on inflation is not one of them. The impact would be trivial.