SCOTLAND’S exports are at risk of a £5.3 billion hit if the Tories pursue a hard Brexit, according to the Scottish Government.
Holyrood Brexit minister Michael Russell says a report published today, suggesting service sector exports falling 60 per cent and goods exports plummeting 44 per cent, could see losses in Scotland of £3bn and £2.3bn respectively.
Dr Monique Ebell, a research fellow from the The National Institute Of Economic and Social Research, says in her report that not only would a hard Brexit hamper the country’s exports, but a free-trade agreement might not make much difference.
Her research was based on free-trade agreements already in existence. She said: “Losses in bilateral trade with other EEA countries from leaving the single market are estimated to be around 60 per cent over the long run, and we find no evidence that signing less comprehensive free trade deals will be able to replace any of this.”
In 2014, 40 per cent of Britain’s services trade – effectively a service provided by a resident in one country to people or companies in another – was with other European Economic Area members, meaning that the overall fall from Brexit in that sector would be 24 per cent.
The most recent Scottish Government figures say service-sector exports increased by £60 million, 0.6 per cent, in 2014, to £10.5bn, and they are the second biggest sector in Scotland, after the manufacturing sector, worth £15.6bn, which includes exports of manufactured food and drink.
Russell said: “Scotland voted overwhelmingly to remain in the EU and this is another report which shows the severe cost to jobs and exports if the UK Government removes Scotland from the single market against our will.
“Services exports from Scotland to Europe have been growing rapidly in recent years and to stop this growth would be a severe blow to our long-term economic prospects.
“That’s why the Scottish Government is exploring every option to protect our relationship with, and place in, Europe and in particular our membership of the single market.
“If the UK Government is giving assurances to private companies, as it’s been reported, then Scotland should be afforded the same level of respect and engagement on a deal to protect our democratic and economic interests.
“This report shows that even if the UK signed a free trade deal with the EU there will be significant economic damage compared with continuing single market membership.
“In the next few weeks the Scottish Government will be publishing detailed proposals for Scotland to remain inside the single market even if the rest of the UK leaves.”
The UK Government’s position on post-Brexit trade agreements has been under scrutiny this last week, after the government gave reassurances to Nissan about the ability of its Sunderland base to export cars to Europe.
Opposition politicians say the government effectively allowed the company to remain in the single market.
Yesterday, one of Japan’s leading businessmen warned May’s government that the Japanese would withdraw unless they received more than “general reassurances”. Haruki Hayashi, president of the Japanese Chamber of Commerce in the UK and chief executive of Mitsubishi in the EU, told MPs, including Brexit Secretary David Davis, that offers to relocate were starting to come in.
Hayashi was quoted as saying: “Some examples of areas of concern for Japanese companies include validity of the single passport system, the free movement of skilled workers between the UK and different parts of Europe, and whether the continuation of the current environment of uncertainty will lead the Japanese companies to postpone further investment decisions.”
Davis sought to reassure the investors present at the reception, saying the UK would be “a beacon of free trade”, adding that May’s government intends to negotiate for a “comprehensive trading” agreement with the EU.
In September, a Japanese Government taskforce delivered a warning to the UK in a 15-page document titled Japan’s Message to the United Kingdom and the European Union.
Ebell's report is published in the latest issue of the National Institute Economic Review.
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