A new paper commissioned by the Scottish government says that Scotland’s economy could be £12.7bn (~€14.3bn) worse off per year following a hard Brexit.
The report, Scotland’s Place in Europe, was published today by the Scottish National Party (SNP) and examines the potential consequences of a hard Brexit for Scotland’s economy. It analyses three scenarios: the possibility of Scotland remaining in the single market; the possibility of the UK striking a free trade agreement with the EU which resembles CETA; and the potential for the UK to leave the EU without a deal.
Under the latter scenario, in which the UK would withdraw from the single market and customs union and trade would revert to World Trade Organization terms, Scotland could lose around 8.5% of GBP, equivalent to £2,300 per person, by 2030.
How would a soft Brexit affect Scotland’s economy?
In every Brexit scenario that the report assessed, it found that Scotland’s economy would suffer. If Scotland is able to retain single market membership, the country’s GDP would be some 2.7% worse off by 2030, a figure which works out at £4bn in 2016 cash terms.
On the other hand, if the UK withdraws from the single market but is able to strike a deal similar to the EU’s recent agreement with Canada the report estimates that Scotland’s GDP would drop by around 6.1% by 2030, equivalent to £9bn.
Decisions on the freedom of movement of people will also impact Scotland’s economy, the report states. It estimates that each additional EU citizen working in Scotland contributes to £34,000 in GDP, amounting to around £4.42bn per year.
What has the response to the report been?
In a speech delivered at the launch of the report, Scottish First Minister Nicola Sturgeon urged the UK government to remain in the single market, which she argued would be the least damaging option. “For the sake of jobs, the economy and the next generation, today we are calling on the UK government to drop its hard Brexit red lines so that Scotland and the UK can stay inside the single market and customs union,” she said. “It is time for the UK government to stop deluding itself, and misleading others, about what will happen if it maintains its red lines”.
On the other hand, the Scottish Conservative party has accused the paper of scaremongering, and suggested that the SNP’s financial forecasts have proved untrustworthy in the past, the BBC reports.
