Brexit may cost you £2300 a year according to Scotgov report

As discussed many times here before, the UK government probably possesses reports into the impact of Brexit on Scotland.

Yet they will not confirm or deny their existence when you write to them requesting they release them under Freedom of Information legislation.

Thankfully, on this matter, the Scottish Government is far more transparent. Today they have released a report looking into the economic impact of Brexit on Scotland. It is a companion piece to their original report from over a year ago. What follows is a summary of their findings. The bottom line is that they anticipate that all Brexit scenarios will hurt Scotland.

Also, we have included this short video of the First Minister presenting the results then fielding questions from the press.

The paper starts off by pointing out that remaining in the EU is the best option for Scotland.

However, we are leaving the EU, and as that is the case the paper points out that EU Single Market access is by far the least damaging option of the ones available.

However, staying in the Single Market is unlikely because the UK government’s Brexit red lines clash with the EU rules for gaining Single Market access. Or in other words, we can’t get the best deal unless we accept free movement of people and the role of the Court of Justice of the European Union.

Unless these red lines change we are heading for a hard-Brexit. Either a Canada style trade deal or we will be trading with the EU under World Trade Organisation rules.

The paper reminds us that the Fraser Of Allander Institute modelling of the WTO scenario suggested that after 10 years:

  • GDP is expected to be over 5% (£8bn in 2015-16
    terms) lower than would otherwise be the case;
  • real wages are expected to be 7% lower,
    equivalent to a reduction of around £2,000
    per year;
  • and the number of people employed in Scotland is
    3% lower (around 80,000 jobs).

The paper also contains Scottish Government research into the three most plausible Brexit scenarios.

  • a World Trade Organisation style relationship.
  • a form of Free Trade Agreement: outside the Single Market and Customs Union; or
  • participating in the European Economic Area(EEA).

The research argues that:

Each scenario examined results in a permanent decrease in GDP relative to continued full EU membership.

ScotlandsplaceinEuropegdp

For example, should the UK pursue a WTO-style relationship, Scotland’s GDP would be around 8.5%, or £12.7 billion (in 2016 cash terms), lower by 2030, compared to continued full EU membership. This is equivalent to a loss of around £2,300 per year for each person in Scotland.

A Free Trade Agreement relationship would mean Scotland’s GDP would be 6.1% (£9bn in 2016 cash terms) lower by 2030. Should the UK remain in the Single Market by participating in the EEA this impact could be significantly mitigated, with Scottish GDP estimated to be around 2.7% (or £4 billion in 2016 cash terms) lower.

Clearly, if the Scottish Government is even close to being correct, then if we have to leave the EU, we really should be looking to keep Single Market access.

This is achievable if progressive voices work together. On a tangent, and as we have discussed several times before, it is frustrating that Labour leader, Jeremy Corbyn is fighting his own party membership on this issue. While he could join with other parties to form a strong coalition against a hard-Brexit, he seems happy to let it happen.

The Scottish Government paper is quite detailed and goes into sectorial analysis explaining why staying in the Single Market is better for individual parts of the Scottish economy.

We will provide more detail on that in subsequent blogs.

Meanwhile, the main takeaway from today is that leaving the EU is a very bad idea for the Scottish economy. However, if we are going to do so, then maintaining Single Market access is the least damaging option. This least damaging option looks hard to achieve due to the UK government’s own Brexit red lines and the lack of leadership shown by Jeremy Corbyn on this issue.

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