Scots warn of Brexit costs as Sturgeon ups pressure on UK
Leaving the European Union will sap Scotland’s economy by between £1.7 billion and £11.2 billion pounds (about €2 billion to €13 billion) by 2030, depending on which new trade relationship Britain chooses, the Scottish government said on Tuesday (23 August).
First Minister Nicola Sturgeon today announced she would seek Scottish Parliament approval for a new minister to lead engagement with the UK government in “the pre-article 50 period and beyond”.
Article 50 is the legal process the UK must trigger to leave the EU. Despite pressure from EU leaders to invoke it as soon as possible, Britain has said the earliest will be next year.
“Those who have previously argued that the UK somehow gives financial security and certainty to Scotland – that argument is bust, frankly,” Sturgeon said.
“Brexit will deliver a significant hit to our economy and public finances and that is the reality,” Sturgeon said before adding she would do her best to minimise that impact.
“It may be impossible to protect Scotland’s interests in the UK context but that doesn’t mean I am not going to try,” she said before adding any decision on Scottish independence would ultimately be for the Scottish people to decide.
Sturgeon will also convene a new cabinet sub committee to oversee and direct all Scottish government work on Brexit.
Before and immediately after the referendum vote, Sturgeon had warned that a vote taking Scotland out of the EU on the basis of an English vote could resurrect calls for Scottish independence from the UK.
In September 2014, Scots voted against UK independence 55% to 45% in a referendum, backed by then Prime Minister David Cameron.
Scotland’s government has vowed to seek ways to keep its EU membership, even though Britain as a whole voted to leave the EU two months ago. Scotland – one of the four constituent nations of the United Kingdom – voted to remain by 62% to 38%.
New British Prime Minister Theresa May has warned that Scottish plans to remain in the EU despite the UK’s vote to Leave were “impracticable”.
In May 2015, the Scottish National Party surged to an unprecedented victory in the UK national election, taking all but three Scottish seats up for grabs in Westminster.
That election also saw a surprise victory for Conservative David Cameron, who had promised if elected to call the UK’s referendum on EU membership that ultimately forced his resignation.
The Scottish estimate on the cost of Brexit was based on studies by economic think tanks and Britain’s finance ministry looking at the different trade agreements potentially selected by Britain after its vote to leave the EU, as well as the uncertainty facing the economy until its choice is clear.
“Pursuing an option short of full EU membership risks damaging Scottish exports, makes the country a less attractive location for overseas investors and reduces future economic growth and prosperity,” the devolved Scottish government said.
The Scottish government summarised the potential impact on the economy of Britain’s different trade options – joining the European Economic Area, seeking a Free Trade Agreement or a World Trade Organisation membership – as estimated by different think-tanks.
Researchers from the University of Strathclyde’s Fraser of Allander Institute have revised down their forecasts for Scottish gross domestic product growth in 2017 to 0.5% from 1.9% after the referendum result, factoring in economic uncertainty and depleted consumer confidence.
Scotland’s exports to the EU were almost 12 billion pounds (€14 billion) in 2014, or 42% of all the goods it sends abroad.
The first official data covering the post-referendum period showed no immediate big hit to Britain’s economy as retail sales surged in July and claims for unemployment benefits fell.
But economists expect rising inflation from a weak pound, which shed more than one tenth of its value against the euro, and worsening business confidence will begin to take their toll on the economy in the coming months.
Sturgeon is not ruling out another Scottish independence referendum as part of its efforts to keep Scotland in the EU, although independence was not mentioned in its summary of the risks to the Scottish economy of the EU vote.
Sturgeon has been trying to drum up support for Scotland to stay in the EU even as Britain leaves, and has been on a diplomatic offensive to raise Scotland’s profile.
“There is […] a broad consensus amongst most economists that any of the options would increase barriers to trade and result in lower economic growth than full membership of the EU over the longer term,” the report said.