Evan Williams looks at the Scottish Government's position on Brexit.

The Scottish Government’s analysis of the impact of Brexit on people, jobs and investment makes for grim reading.

Their stark conclusion is that Brexit will slow growth, resulting in lower household incomes. A Brexit settlement that leaves the UK out of the Customs Union and Single Market is predicted to have the most severe impact. In line with last week’s leaked UK Government report, the Scottish Government’s analysis argues that the impact of any outcome, short of full EU membership, will damage Scotland’s economy. 

By 2030, the Brexit-associated reduction in Scottish GDP is projected to be between 2.7% under the European Economic Area (EEA) membership option, and as high as 8.5% if the future relationship is based on World Trade Organisation (WTO) terms. On the basis of those numbers, Brexit could result in a loss of economic output of as much as £12.7bn (2016 cash terms), representing an average loss of £2,300 a year for each person in Scotland by 2030.

The Scottish Government is at pains to highlight the historic benefits of EU membership to Scotland, and the particular needs of the Scottish economy.  One of the main differences between Scotland and the UK as a whole comes down to demographics. The Scottish Government makes a strong argument in favour of continued free movement of labour because of Scotland’s ageing population and low birth rate, asserting that migration from Europe has resulted in significant net benefits to Scotland - estimated to be worth as much as £4.4 billion in GDP.

Over the coming months, we can expect First Minister Nicola Sturgeon to increase the pressure on Prime Minister Theresa May and her efforts to conclude the Brexit negotiations. While the ruling SNP might be enjoying the UK Government’s visible discomfort on Brexit, there remains the serious question of how hard to press the case for Scottish independence - particularly as opponents of independence argue that the impact of separation on people, jobs and the economy are likely to be far greater than that of Brexit.

Last year’s discussion about freedom of movement between the Republic of Ireland and Northern Ireland generated enthusiasm in Scotland for the possibility of bespoke Brexit deals for different parts of the UK. This will remain the objective of the Scottish Government, irrespective of how deliverable it is likely to be.  The Scottish Government has no reason to feel any sense of obligation to support the UK government's positions in their Brexit negotiations, and we can expect them to continue to raise objections and demand exceptions, all supported with published analysis of the kind the UK Government seem so unwilling to release.

Meanwhile, businesses in Scotland will, with their counterparts in the rest of the UK, be looking to make contingencies and plan for the future under a range of Brexit scenarios. Newington’s Scotland office can help - please contact Evan Williams on [email protected] for more information.