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Brexit 'to cost Scottish economy £11.2bn a year'

Published 23/08/2016

First Minister Nicola Sturgeon said the figures show the importance of Scotland's relationship with the EU
First Minister Nicola Sturgeon said the figures show the importance of Scotland's relationship with the EU

Brexit is projected to cost the Scottish economy up to £11.2 billion each year, according to the Scottish Government.

Leaving the European Union will also hit tax revenues by up to £3.7 billion annually, its analysis found.

First Minister Nicola Sturgeon said the figures are further evidence of the need to protect Scotland's relationship with the EU.

The Government analysis paper suggests that by 2030, Scottish GDP is projected to be between £1.7 billion and £11.2 billion per year lower than it would have been if Brexit did not occur.

Tax revenue is projected to be between £1.7 billion and £3.7 billion lower.

The paper is the first in a series that the Government plans to publish looking at the potential impact on Scotland of the UK leaving the EU.

Ms Sturgeon said: "This paper shows, in the starkest possible terms, the potentially huge cost to Scotland of being taken out of the European Union and the single market.

"This analysis - based on a wide range of sources - demonstrates that leaving the EU, under any potential alternative arrangement, will have a profound and long-lasting impact on the public finances and the wider economic and societal well-being of both Scotland and the UK as a whole.

"That stark picture outlined today means that, whatever the model of relationship with the EU which is chosen by the UK Government in their negotiations before and after Article 50 is triggered, it will not be as economically beneficial as full EU membership.

"The only way to protect Scotland's economy - and the clear benefits which come from being part of the world's biggest single market - is to work to ensure we protect our relationship with the EU.

"My Government is absolutely committed to pursuing every possible avenue and option to do that."

The First Minister, who has warned the result of June's EU referendum makes another vote on Scottish independence ''highly likely'', has already held talks with the Prime Minister, EU institutions and individual member states.

She has also set up her own expert group to advise on protecting Scotland's relationship with Europe, and has set out five key interests she will try to protect during any negotiations.

These include ''the need to make sure Scotland's voice is heard and our wishes respected'', free movement of labour, access to the single market and a say in its rules.

Leaving the EU could p otentially increase the cost of exporting to European markets, reduce the UK's attractiveness to overseas investors and impose new restrictions on labour, increasing skills shortages and reducing productivity, the Scottish Government states.

The scale of such impacts on Scotland will depend on the UK's Brexit deal with the EU, and whether Scotland succeeds in securing its own distinct relationship with the bloc.

Options for the UK include securing European Economic Area (EEA) membership in which it would retain access to the single market, negotiating its own Free Trade Agreement with the EU such as Switzerland has done, or reverting to World Trade Organisation (WTO) rules.

The UK Government and the EU member states have yet to set out their preferred models.

The Scottish Government's paper draws on analysis of the different options by the Treasury and a range of organisations such as the Centre for Economic Performance and the National Institute of Economic and Social Research to calculate the potential long-term impact on Scotland.

It found EEA membership was likely to have the smallest impact on the economy and public finances, while WTO trading rules would likely have the largest impact.

Alastair Cameron, director of pro-union organisation Scotland in Union, said the Scottish Government is using the figures to deflect from its own economic data due to be published this week.

He said the economic hit caused by Brexit would be outweighed by the damage caused if Scotland were to leave the UK.

"By rushing out these speculative and selective Brexit figures in a cynical attempt to muddy the waters ahead of the Government Expenditure and Revenue Scotland (GERS) report, Nicola Sturgeon has all but admitted she has no answers to the economic questions about independence," he said.

"While there is evidence that Brexit could harm the Scottish economy, she has failed to recognise this would be vastly outweighed by the damage caused by turning our back on our biggest trading partner - the rest of the UK, a market nearly four times as big."

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