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Devolved govt sees 2 billion to 11 billion pound Brexit hit to Scottish economy

Published 23/08/2016, 12:36
© Reuters. Scotland's First Minister Nicola Sturgeon speaks at the public Question and Answer event with EU nationals living in Scotland, at the Corn Exchange,

EDINBURGH (Reuters) - Leaving the European Union will sap Scotland's economy by between 1.7 billion and 11.2 billion pounds ($14.76 billion) by 2030, depending on which new trade relationship Britain chooses, the Scottish government said on Tuesday.

Its estimate was based on studies by economic think tanks and Britain's finance ministry looking at the different trade agreements potentially selected by Britain after its vote to leave the EU, as well as the uncertainty facing the economy until its choice is clear.

"Pursuing an option short of full EU membership risks damaging Scottish exports, makes the country a less attractive location for overseas investors and reduces future economic growth and prosperity," the devolved Scottish government said in a statement.

Scotland's government has vowed to seek ways to keep its EU membership, even though Britain as a whole voted to leave the EU two months ago. Scotland -- one of the four constituent nations of the United Kingdom -- voted to remain by 62 to 38 percent.

The Scottish government summarised the potential impact on the economy of Britain's different trade options -- joining the European Economic Area, seeking a Free Trade Agreement or a World Trade Organisation membership -- as estimated by different think tanks.

Researchers from the University of Strathclyde's Fraser of Allander Institute have revised down their forecasts for Scottish gross domestic product growth in 2017 to 0.5 percent from 1.9 percent after the referendum result, factoring in economic uncertainty and depleted consumer confidence.

Scotland's exports to the EU were almost 12 billion pounds in 2014, or 42 percent of all the goods it sends abroad.

The first official data covering the post-referendum period showed no immediate big hit to Britain's economy as retail sales surged in July and claims for unemployment benefits fell.

But economists expect rising inflation from a weak pound -- which shed more than one tenth of its value against the euro -- and worsening business confidence will begin to take their toll on the economy in the coming months.

First Minister Nicola Sturgeon is not ruling out another Scottish independence referendum as part of its efforts to keep Scotland in the EU, although independence was not mentioned in its summary of the risks to the Scottish economy of the EU vote.

Sturgeon has been trying to drum up support for Scotland to stay in the EU even as Britain leaves, and has been on a diplomatic offensive to raise Scotland's profile.

"There is (...) a broad consensus amongst most economists that any of the options would increase barriers to trade and result in lower economic growth than full membership of the

© Reuters. Scotland's First Minister Nicola Sturgeon speaks at the public Question and Answer event with EU nationals living in Scotland, at the Corn Exchange,

EU over the longer term," the report said.

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