On Monday, First Minister of Scotland Nicola Sturgeon published the Scottish Government’s economic assessment of the impact of Brexit on Scotland. It highlighted the potential damage to Scotland’s economy from leaving the EU, especially in the case of no Brexit deal.
Best model is the single market
Presenting the analysis, First Minister Sturgeon mentioned how Scotland was ‘particularly well-placed to take advantage of the of the developing and deepening single Market — the world’s biggest economy of 500 million people, eight times the size of the UK.”
“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.”
The economic effects of Brexit
The Scottish Government states that ‘the best way to protect the economy would be to remain in the Single Market and the Customs Union.’ A so-called no deal option would leave Scotland’s GDP approximately £12.7 billion lower by 2030 than it would be if it had remained in the EU. A free trade agreement based on the EU-Canada deal would see Scotland’s GDP £9 billion lower than 2030.
However, even remaining in the European Economic Area would see a loss of 2.7% of GDP by 2030, highlighting that any change from the status quo would damage Scotland’s economy. Under this option, business investment would be down around 3%, and real disposable income 1.4% compared to the baseline of remaining in the EU.
The report later mentions that there are potential economic benefits to remaining in the Single Market as it develops. It sources a study conducted by the European Parliamentary Research Service that estimates that completing the single Market could add an additional 5 to 8.6% to EU GDP.
A second independence referendum?
This analysis comes after comments on Sunday on the Andrew Marr show where Sturgeon indicated that she would only seek to hold a potential independence vote after the future of EU-UK relations become clearer in the autumn of 2018.