Brexit to hit Aberdeen and Edinburgh economies twice as hard as rest of UK

While predicting that the economies of every major British city are set to fall under the ‘hard Brexit’ plan being forced through the parliament by the UK Government, the Centre for Economic Performance (CEP) at the LSE produced with think-tank Centre for Cities, also claims that Aberdeen will see the biggest decline in economic output across the UK, while Edinburgh is also set to be hit hard by Brexit.

The findings show the economies of the oil and gas based Aberdeen-Grampian and Edinburgh-Lothian regions are set to fall by twice as much as the UK average.

According to the report published today, Dundee and Glasgow will also suffer more than the UK-hard-Brexit-average, albeit but not as badly as Edinburgh and Aberdeen, as they are still based on low-tech, low-skill, low-wage economies.

The impacts are predicted to be more negative under hard Brexit in every local authority area, due to the increased burden of greater trade costs.

Economic output in cities as measured by Gross Value Added (GVA) is predicted to be 1.2 per cent lower on average under a ‘soft Brexit’ and 2.3 per cent lower under a ‘hard Brexit’ than if the UK remained in the EU.

But cities with high shares of employment in the private knowledge and information-based (KIBS) sectors are more likely to be negatively affected according to the model, particularly under a hard Brexit, the report claims.

In the three cities with the largest private-KIBS sectors - Reading, London and Edinburgh - the predicted loss is equivalent to 2.7 per cent of GVA.

Cities that are predicted to be most negatively affected by Brexit – where Edinburgh West was one of the most anti-Brexit seats in Scotland – were more likely to vote remain in the 2016 referendum.

Scottish Lib Dem leader Willie Rennie said the report bolstered his party’s case to abandon Brexit.

Mr Rennie said: “This report shows that a Brexit, whether soft, hard or even multi-coloured will have a significant negative impact on major cities across Scotland. With both the Scottish and UK economy in a fragile state we need to build that strength not take it away. Scotland’s biggest cities are shown here to be hit hard by any type of Brexit and the UK government cannot just waive these numbers away.”

A UK government spokesman said it was working on a trade deal to build on the strengths of all cities.