Hard Brexit would strip Scottish economy of £30bn - LSE
Edinburgh, Glasgow and Aberdeen would each lose billions of pounds in economic output as a total of almost £30bn flowed out of Scotland over the five years immediately after the UK Government walked away from the EU without a trade deal, new research from the London School of Economics (LSE) has revealed.
While the institution’s data shows that Scotland’s major urban centres would be hit by a soft Brexit, along with every other part of Scotland and the UK, the effects would be dampened by retaining access to the single market during a transition period.
However the LSE experts warn that a hard, no-deal Brexit will be devastating.
While Scotland should expect to lose £17bn over five years in the event of a soft Brexit, this increases by £13bn if no deal is achieved by Prime Minister Theresa May’s negotiators, with Scottish cities among the hardest hit in the UK.
Edinburgh would lose 6 per cent (£5.5bn) of its economic output after a hard Brexit and 3.5 per cent (£3.2bn) after a soft Brexit over the first five-year period.
Glasgow would see a 5.5 per cent fall with a hard Brexit, costing £5.4bn, or a 3 per cent fall in economic output (almost £3bn) with a soft Brexit.
Worst hit of all north of the border in the case of a a hard Brexit would be Aberdeen, with the Granite City, with 7 per cent (£3.8 bn) wiped off of its economic output - second only to the City of London, while a soft Brexit would cost it 4.5 per cent (£2.4bn).
Other council areas to lose out badly would be Fife at 3 per cent (£1bn) for a soft Brexit or 5 per cent (£1.7bn) for hard. South Lanarkshire would suffer by 2.5 per cent (£720m) in the former scenario and 4.5 per cent (£1.3bn) in the latter, according to the LSE.
Meanwhile, the mainly rural Argyll and Bute would find itself down by 2 per cent (£170m) in a soft Brexit, and double that percentage (£350m) in a hard Brexit.
A hard Brexit, the investigation shows, would cost the UK as a whole £430bn over five years.
Liberal Democrat leader and former UK business secretary Vince Cable seized on the figures after senior cabinet minister Liam Fox last weekend talked up the possibility of the UK walking away from the EU without a trade agreement.
Calling on ministers to commit to staying in the single market and customs union, Mr Cable said: “This work by the LSE brings out the extent to which Scotland would be seriously damaged economically by a no-deal Brexit. These economic modelling exercises are necessarily approximate, but if anything they understate the damage once we take into account the knock-on effects. And the damage to cities such as Edinburgh and Aberdeen will hit the whole of the UK because they are central to Britain’s prosperity.
“The UK Government must guarantee our membership of the single market and customs union. This is precisely why the Liberal Democrats, alone among political parties, are campaigning for an exit from Brexit by offering the people a vote on the final deal.”
Scottish Liberal Democrat MP, Christine Jardine said: “These figures demonstrate clearly the need for a rethink on Brexit. This situation is potentially disastrous for the economies of Edinburgh and Scotland as a whole, and not what the Brexiteers claimed and continue to claim.
“We in the Liberal Democrats saw the dangers in Brexit before the referendum. Now we know that argument was justified and we must continue to rail against this damaging Brexit and demand the public given a fresh choice once we see the details of the deal… if there is one.”
Meanwhile, Britain’s five biggest business lobby groups have warned that the UK risks losing jobs and investment without an urgent Brexit transition deal.
In a joint letter being sent to Brexit Secretary David Davis, the groups including the CBI and Institute of Directors, say time is running out.
The head of the CBI said firms wanted an agreement on the transition period by the end of the year.
A government spokesman said the talks were “making real, tangible progress”.
The other lobby groups backing the letter are the British Chambers of Commerce, the Federation of Small Businesses, and the EEF manufacturers’ body.
CBI director-general Carolyn Fairbairn said: “One of the big messages from firms is ‘get on with it’ on both sides.
“This is real, this is urgent and a transition agreement by the end of the year would help enormously to keep investment and jobs in the country,” she said.
A spokesman for the Department for Exiting the European Union said: “We are making real and tangible progress in a number of vital areas in negotiations.