EY: Scottish businesses braced for “significant” impact of Brexit

Global accountancy firm EY consulted over 80 businesses and trade associations in Scotland – and every organisation said that Brexit-related uncertainty was a major concern with businesses highlighting risks to competitiveness, profitability and, in some cases, their viability.

The report says: “The impact of Brexit on consumers in Scotland could be significant through price rises on all imported goods as a consequence of tariffs, border frictions and a weaker currency.”

The findings come from the most detailed analysis yet of the implications of Brexit for Scottish business, while also offering ideas on how they could seize opportunities that arise.

It found, between September and November, that the sectors most vulnerable to new barriers to trade with Europe are food and drink, chemicals, life sciences and other manufacturing.

The same sectors, plus creative industries, emphasised the importance of retaining alignment of the regulations that govern trade between European countries.

In life sciences, one clinical trials company “indicated they may consider relocating labs to the EU”.

For food and drink, and for the energy sector, representatives highlighted the risk of higher consumer prices.

Tariffs would also price some exporters out of the market. The instance of seed potatoes was highlighted, representing half of the potato harvest and with the potential to earn up to £100m per year.

Seed potatoes would carry a 40 per cent tariff if there is no deal on Brexit, and the report says Dutch firms are “anecdotally, ready to fill in lost supply from Scotland”.

The chemicals sector faces tariffs of up to 4 per cent. With low margins, companies clustered around Grangemouth said they risked losing out to more competitively-priced EU rivals.

Commenting on the findings, Economy Secretary Derek Mackay, said: “This report demonstrates the costs to Scotland of a Brexit we did not vote for and demonstrates why a no deal Brexit must immediately be taken off the table by the UK Government. It captures the authentic voice of Scottish business and offers further evidence of the severe and disproportionate impacts that a no-deal outcome would have in Scotland. 

“Many businesses highlighted the risks to their competitiveness and profitability, some were worried about future viability and a number are already reporting negative impacts on investment, the costs associated with planning for Brexit and recruitment of staff.

“On top of the damage it is clearly causing to Scottish businesses Brexit, in whatever form, will cost jobs, make people poorer, damage our society and undermine the democratic decision of the people of Scotland to remain in the European Union.

“The UK Government must now take urgent steps to rule out a no-deal Brexit, which threatens to have devastating consequences for jobs, businesses and communities, extend the Article 50 process and hold a second referendum on EU membership.”