SCOTLAND could suffer “a major impact on its economy” plus the possible loss of billions of pounds worth of foreign direct investment as a result of Brexit, a new study said yesterday.
An independent report produced by firm Irwin Mitchell and the Centre for Economics and Business Research (Cebr), the UK Powerhouse study confirms the Scottish Government’s predictions about Brexit, mainly if there is no deal to keep Scotland in the single market.
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Looking at the wider impact on Brexit on Scotland, the report outlines how the EU is this country’s most important international export market and losing access to the single market could cut the country’s output by 8.5% by 2030.
The report states: “Impact would be felt most in sectors such as manufacturing of machinery and equipment, where Scotland is highly integrated into the global supply chain, providing a range of goods, such as engineering systems and subsea and drilling equipment.”
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Scotland has also been a major recipient of foreign direct investment (FDI) for more than 15 years, but the report has warned that Brexit may mean investors re-evaluate projects in the country and shift their focus elsewhere.
The report states: “Estimates show that since 2002, the level of FDI into Scotland has supported approximately 43,000 jobs, particularly in research and development.
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Between 2012 and 2016, Scotland was consistently ranked the most attractive region outside of London for foreign investment in the UK. When Scotland’s relationship with the EU changes, investors may become cautious in maintaining their levels of FDI, waiting instead to see how the economy adapts.
Potential new investors will also re-evaluate any investment projects, creating the risk that future flows of FDI will move elsewhere.
The report adds that Aberdeen is expected to have one of the fastest growing city economies in the UK in the three months following the scheduled date for Brexit.
Mark Higgins, regional managing partner at Irwin Mitchell’s Glasgow office, said: “This report has raised significant concerns regarding how Brexit will affect Scotland.
“The country exported more than £12 billion worth of goods and services in 2015, while FDI is thought to have supported around 43,000 jobs since 2002.
“With this in mind, problems with either of these could have a major impact on the country.
“Ultimately, the overall impacts of Brexit in the long term prove difficult to measure without clear guidelines and a deal in place.”
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