Brexit – What Does It Mean For Scotland?

Scotland voted 62%-38% to remain in the European Union in the 2016 referendum. But, along with the rest of the UK, left the EU formally on January 31 2020 and definitively on December 31 2020 when the transition period came to an end.

The country is now subject to the Trade & Cooperation Agreement which governs relations between the EU and UK.

Impact of Brexit

The Brexit effect has been nothing but deleterious (even when taking the pandemic into account). In the first two months since the UK left the customs union and single market Scottish firms took a disproportionate hit as EU imports from the UK almost halved (down 47%) year-on-year. The EU trade surplus rose as EU exports fell by less (minus 20.2%). But the impact goes well beyond trade.

The Scottish Government’s initial analysis of the TCA was: “Scotland’s people will no longer be able to work, study and travel freely in the EU. Fewer people will migrate to Scotland, making our economy, culture and wider society poorer. Cooperation with the EU on security will be less effective, which means Scotland’s police and judicial system will have reduced capacity and capability to combat crime. The UK will be out of the EU single market – Scottish businesses exporting goods and services will not be able to trade with the EU like they did before, making them less competitive. Scottish Government modelling estimates that, even with a deal of the kind the UK government has negotiated, Scotland’s GDP could be around 6% lower by 2030 than it would be with EU membership (£9bn in 2016 cash terms).

The economic impact spreads across the food and farming sectors, including fish, to embrace financial services and manufacturing.

Small and medium-sized firms (SMEs) have been heavily hit by, ironically given Leavers’ diatribes against “Brussels bureaucracy”, the extra red tape involved in clearing customs; some have been forced to set up on the continent, others have given up in frustration and disgust.

The ending of freedom of movement has made it harder to live and work in the EU while young people are denied participation in the world’s most successful exchange programme, Erasmus-Plus.

The new Internal Market Act, enshrining the TCA in UK law, arguably removes significant devolved powers from the Scottish Parliament – including management of the Shared Prosperity Fund that is meant to replace EU structural funds of immense benefit to Scotland, not least its rural communities.

You can read more here. But the plain fact is that, as economist Graeme Roy put it (when he was still director of the Fraser of Allander Institute): “But the key contrast between Covid and Brexit is timing. While the economic hit from Covid has been sudden and deep, the economic impact of the UK’s long walk towards Brexit will shape our economy for decades.” And he added, rightly so: “… Brexit wasn’t about making the UK economically stronger. Nor was there an effective plan to manage the transition. Sadly, it is those far removed from the corridors of power who will be worse off from Brexit long after the Covid crisis fades from focus.