Brexit to hit rest of UK harder than Scotland
SCOTLAND will lose up to 80,000 jobs in a decade as a result of Brexit, but the rest of the UK will suffer even more, the country’s leading economic think tank has predicted.
The Fraser of Allander Institute said Brexit would depress Scottish GDP by 2 to 5 per cent, but the UK’s greater reliance on EU trade meant it would suffer even more.
Nevertheless, even on its most optimistic scenario, based on Norway’s close relationship with the EU, the Institute said Brexit would mean 30,000 fewer Scottish jobs than there would otherwise be after 10 years, Scottish GDP down £3bn and average wages down £800.
Exports of Scottish goods would fall 12 per cent and services by 8 per cent.
Under a “hard Brexit”, currently seen as the most likely outcome, there would be 80,000 fewer Scottish jobs, Scottish GDP would be down £5bn, and wages would be £2000 a year lower.
The sectors of the economy worst hit would be wholesale and retail trade, transportation and storage, professional services and research and development, and public administration.
The report said the impact on Scotland “whilst significant, is estimated to be smaller than for the UK as a whole” in terms of GDP, jobs and wages, but added there would also be “spill-over effects” affecting Scottish firms as a result of a slower UK economy.
The differing regional effects could make “securing a consensus” about the terms of Brexit more difficult across the UK’s regions and devolved nations, it warned.
In August, a Scottish Government paper suggested Scottish GDP could be £1.7bn to £11.2bn per year lower by 2030 than it would have been without Brexit.
The Fraser of Allander Institute said its report, prepared for Holyrood’s European Committee, was the most detailed yet on the impact of EU withdrawal on Scotland.
It examined three scenarios – integrated trading relationships akin to Norway and Switzerland, and a hard Brexit based on tariffs and basic World Trade Organisation rules.
It concluded Brexit would have a “significant negative impact” on the Scottish economy in each case, with the impact getting worse the more isolated the UK was from the EU.
Both Scotland and the rest of the UK could be “less attractive locations to live and work relative to the rest of the world, since both experience significant falls in real wages and fewer employment opportunities”.
Institute director Professor Graeme Roy said: “The range of possible outcomes is driven by the nature of any post-Brexit relationship between the UK and the EU – the weaker the economic integration with the EU, the greater the negative impact.”
SNP committee convener Joan McAlpine said: “If the UK Government leads us into a hard Brexit, this indicates there could be disastrous consequences for jobs, exports and production.”
Labour’s Jackie Baillie said: “This shows the cost of the Tories’ reckless Brexit gamble. It should be heeded by the SNP – our country is already headed into uncertainty and the last thing we need is any more constitutional chaos.”
Green MSP Ross Greer added: “As the Tories ramp up the racist rhetoric, this economic research underlines the need for Scotland’s voice to be heard in Brexit negotiations.”
“Every avenue must be explored to keep Scotland in Europe and protect the right to free movement and that has to include a referendum on independence.”
But Scottish Conservative economy spokesman Dean Lockhart said: “No-one doubts the impact of Brexit will be challenging on a range of levels. However, this makes clear the impact on Scotland will be comparatively less than the rest of the UK. The SNP’s go-to excuse for Scottish economic under-performance has been completely blown out the water.”
A UK Government spokesperson said: “We have not begun negotiating our exit from the EU, so it seems very premature to draw conclusions from some highly speculative models. We are determined to get the best deal possible for the whole of the UK in the negotiations.”