Hard Brexit would cost Scotland's economy £12.7bn

15 January 2018, 12:37 | Updated: 15 January 2018, 12:39

Saltire Flag

Nicola Sturgeon has pledged to make the case for keeping the UK in Europe's single market "more loudly than before" as the Scottish Government published new research showing that could save every Scot £1,600 a year compared to a hard Brexit.

For the UK to quit the European Union with no deal, forcing trading relationships to revert to World Trade Organisation (WTO) rules, would leave Scotland's economy worse off to the tune of £12.7 billion a year by 2030 - the equivalent of £2,300 for every person north of the border, the report claimed.

The analysis - which the Scottish First Minister insisted was "more detailed and extensive than anything so far provided by the UK Government" - showed that, under this scenario, real disposable income and business investment would both fall by about 10%.

Keeping Britain in the single market is "the least damaging option by far", the research found, with GDP forecast to fall by 2.7% by 2030 - the equivalent to £4 billion or just under £700 per head of population, according to Ms Sturgeon.

Meanwhile, disposable income would fall by 1.4%, with business investment expected to be just under 3% lower.

Ms Sturgeon said: "It is clear from these figures that staying in the single market does not insulate us from the costs of leaving the EU but it will minimise those costs.

"Indeed, compared to a hard Brexit staying in the single market will benefit us to the tune of £1,600 per head - £1,600 for every person in Scotland."

Speaking in Edinburgh as she launched the new analysis, the SNP leader insisted: "If Brexit is to proceed, staying in the single market is the only option that makes sense."

The document looked at what could happen under the "only realistic outcomes of Brexit" - remaining in the single market, the UK striking a trade deal with Europe that is similar to Canada's or a no deal Brexit.

"None of these options are as good as staying within the European Union," Ms Sturgeon said.

"Our economy will take a hit under all of them. However, the least damaging option by far is staying in the single market."

The paper was published as the SNP and other opposition parties ramped up their campaign against a so-called hard Brexit, with Labour facing pressure to join.

Ms Sturgeon said: "With the next phase of the talks to determine the future relationship between EU and the UK due to begin in the next few weeks, it is time now to make that case for continued membership of the single market even more loudly than before.

"Today we do exactly that backed by new evidence of the importance of single market membership to our economic and social prospects."

Theresa May's official spokesman said: "The Prime Minister has made clear her commitment to getting a good deal which serves the interests of all parts of the United Kingdom, and that we are confident of doing so.

"We have been clear that we are carrying out extensive preparations in relation to delivering Brexit and the will of the British people."

According to the research, if the UK failed to reach a deal over Brexit and was forced to revert to WTO rules, GDP in Scotland would be about 8.5% - or £12.7 billion - lower by 2030 compared to continued full EU membership.

Meanwhile, under a free trade agreement it is expected Scotland's GDP would be 6.1% lower - or £9 billion in 2016 cash terms - by 2030.

Staying in the single market would have the least damaging economic impact, with GDP forecast to fall by 2.7% - £4 billion in 2016 cash terms - by 2030.

Ms Sturgeon said: "What the modelling in this paper shows beyond any doubt is if the economy, living standards and investment are our priorities, staying within the single market is absolutely essential to minimise the damage of leaving the EU."

She insisted Brexit negotiations mist be focused on this rather than on preventing further splits in the Conservative Party.

The First Minister said: "Keeping the Tory party together in an uneasy truce cannot and must not be a more important consideration and aspiration for the UK Government than the job prospects, living standards and opportunities for this and future generations."

The research highlighted the importance of European citizens to Scotland's economy, with every person in this group contributing an average of £10,400 to government revenues each year.

Ms Sturgeon said: "Over the next 25 years our own projected birthrate will not be sufficient to grow our population.

"In the period to 2041, all our projected population growth will come from inward migration.

"Without that our population could go into decline and with it our ability to grow our economy and fund our public services.

"That would be the stark reality for Scotland of a restriction in our ability to attract people to our country

"That is why, as First Minister, I have a duty to make the case for free movement, no matter how difficult that is sometimes perceived to be."

She concluded: "The weight of evidence in favour of staying in the single market is compelling.

"I believe there is a majority there to be harnessed that can achieve at least that outcome, so I hope the UK Government will now start to listen to this evidence."

She made clear the Scottish Government "stands ready to work with others to minimise the damage of Brexit".

She criticised UK Labour leader Jeremy Corbyn, saying "time is running out" for the party to adopt a clear stance in favour of single market membership.

She said: "Jeremy Corbyn may be doing his best to obfuscate on that issue and pretend he doesn't understand this, but I think the pressure within the Labour Party may change that over the next period.

"If that happens, if Labour gets its act together, there are some, what I would describe as softer Brexit Tories who would I think favour single market membership."

Asked if she thought she could change Theresa May's mind on the issue, she added: "Who knows whether Theresa May will even be prime minister by the time these negotiations conclude?

"There are voices within the Conservative Party that would argue for a softer Brexit and for single market membership, but put that to one side there is I believe a majority outside of the Conservative Party.

"I think the bigger issue to get to that majority is to get Jeremy Corbyn off of the ridiculous position he is in.

"Either Jeremy Corbyn is still misunderstanding the position of the single market, which given how often it has been pointed out to him can't possibly be the case, or he is now trying to deliberately mislead people with this line that you cannot be in the single market if you're not in the EU. Norway stands as the living proof that that is just not the case.

"The forces within Labour in this direction are getting louder, so I believe that majority is there and the House of Commons can, if it chooses to, decide not to allow Theresa May to go down the road that is in her narrow party political interest to go down, and instead force a path that is much more in the interests of the country as a whole."