Independence could cost Scotland's economy £11bn a year, forecast suggests
Economists say impact of leaving UK’s common market would hit two to three times as hard as leaving EU
The UK is Scotland’s largest and most important trading partner, the report said, accounting for 61% of its exports and 67% of its imports. Photograph: Jane Barlow/PA
Scotland’s economy would shrink by at least £11bn a year if it became independent, more than doubling the damaging impacts of
Brexit, a team of economists has forecast.
The report from the
London School of Economics and City University of Hong Kong found that quitting the UK’s common market would hit the Scottish economy two to three times as hard as leaving the EU, just counting the impact on trade alone.
Suggesting that the worst economic effects would take several decades to take hold, the LSE’s Centre for Economic Performance said the impacts on its trade with both the UK and the EU would shrink Scotland’s economy in the long run by between 6.3% and 8.7%.
That was equivalent to a loss of between £2,000 to £2,800 per capita a year: with Scotland’s
population estimated to be nearly 5.5 million, that puts the losses at between £11bn and £15.4bn.
The Scottish government, which is currently wrestling with the near collapse of Scottish
seafood exports to the EU because of post-Brexit customs controls, currently spends around £14bn on the NHS each year.
The authors stressed their analysis only covered the impacts of increasing trading costs, and excluded other economic or fiscal issues post-independence, such as cuts or increases in inward investment, changes in immigration, currency changes or tax changes.
While it would be slightly better for an independent Scotland to rejoin the EU compared with staying outside both it and the UK, it would be extremely hard for EU trade to make up for all the substantial losses in UK trade.
The UK is Scotland’s largest and most important trading partner, the report said, accounting for 61% of its exports and 67% of its imports – around four times greater than its trade with the EU. Independence would increase trading costs with the rest of the UK by 15% to 30%.
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The report, Disunited Kingdom? Brexit, Trade and
Scottish independence, concludes: “Changes in Scottish trade patterns following independence are likely to occur gradually, over a generation or more. Consequently, in the initial decades after independence, the rest of the UK will remain Scotland’s biggest trade partner.”
Hanwei Huang, one of the report’s authors, said: “This analysis shows that, at least from a trade perspective, independence would leave Scotland considerably poorer than staying in the United Kingdom.
