Brexit trading losses cost Scotland £4bn

The cost of Brexit to Scotland’s economy could total £4bn over 15 years, the chief economist has said.

In a paper marking the five-year anniversary of the UK leaving the EU, Scotland’s GDP is projected to be two per cent lower than if it had stayed in the bloc due to lost trading opportunities.

It concluded Brexit was a “large negative economic shock” based on lost trade alone.

Business minister Richard Lochhead has called on the UK Government to “consider its approach to economic growth”.

He said: “The Scottish Government has been clear that Scotland’s place is in the EU and the huge European single market. But we are also a voice for greater co-operation with the EU right now and we urge the new UK Government to forge a much closer relationship with our fellow Europeans.”

The paper from the Office of the Chief Economic Adviser found the free trade agreements with Australia, India, Switzerland and Turkey would not outset the negative impact of leaving the EU, only boosting the economy by 0.2 per cent (or £0.4bn).

An agreement is already in place with Australia, but negotiations between the UK and India, Switzerland and Turkey are still ongoing.

The paper did not consider other trade agreements, instead saying it seeks to “approximate changes in trade barriers and explore the magnitude of potential economic effects” rather than calculate the “exact impact”.

Prime Minister Keir Starmer is set to meet the leaders of the 27 EU states at a dinner next week.

No. 10 wants to create closer trading ties between the UK and EU, and has not ruled out the possibility of joining an arrangement to facilitate tariff-free trading.

But a number of barriers stand in the way of that happening, including disagreements over a youth mobility scheme and fishing rights.

A spokesperson for the prime minister told reporters last week: “We’ve always said that we want to look at ways to reduce barriers to trade whilst remaining within our clear red lines. The arrangement that’s being discussed is not a customs union.

“Our red line has always been that we will never join our customs union, never re-join the single market, no freedom of movement, but we’re just not going to get ahead of those discussions.”

Starmer reiterated that point at Prime Minister’s Questions yesterday when pushed by Lib Dem leader Ed Davey about re-entering the customs union.

First Minister John Swinney has backed rejoining the EU and said in a speech last week this “should be our clearly stated goal and national mission”.

However, acknowledging that that won’t happen immediately, he said there were some “immediate steps” that could be taken to improve the relationship with the EU, including “renewed participation in the single market” and creating visa routes for graduates to remain in Scotland after their studies had concluded.