Scotland’s economy would contract by at least £ 11bn a year if it became independent, more than double the damaging impacts of Brexit, a team of economists predicted.
The report from the London School of Economics and the City University of Hong Kong found that leaving the UK common market would affect the Scottish economy two to three times more than leaving the EU, counting only the impact on trade.
Suggesting that the worst economic effects would take several decades to take hold, the LSE’s Center for Economic Performance said shocks to its trade with both the UK and the EU would reduce Scotland’s economy in the long run by 6.3 % and 8.7%.
That equates to a loss of £ 2,000 to £ 2,800 per capita a year – with Scotland population estimated at nearly 5.5 million, that puts the losses between £ 11bn and £ 15.4bn.
The Scottish government, which is currently struggling with the near collapse of Scottish seafood exports to the EU due to post-Brexit customs checks, currently spends around £ 14bn on the NHS each year.
The authors emphasized that their analysis only covered the impacts of rising trade costs and excluded other post-independence economic or fiscal problems, such as cuts or increases in domestic investment, changes in immigration, currency changes, or tax changes.
While it would be slightly better for an independent Scotland to rejoin the EU compared to staying outside of the EU and the UK, it would be extremely difficult 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, according to the report, accounting for 61% of its exports and 67% of its imports, around four times more than its trade with the EU. Independence would increase trade costs with the rest of the UK by 15-30%.
The report, Kingdom Disunited? Brexit, Scottish Trade and Independence, concludes: “Changes in Scottish trade patterns after independence are likely to occur gradually, over a generation or more. Consequently, in the first decades after independence, the rest of the United Kingdom will continue to be Scotland’s largest trading partner. “
Hanwei Huang, one of the report’s authors, said: “This analysis shows that, at least from a business perspective, independence would leave Scotland considerably poorer than staying in the UK.
“While many considerations will influence shaping the outcome of a second referendum, voters need to know what the likely costs and benefits of each course will be. This report contributes to that knowledge. “
Fiona Hyslop, the Scottish government’s finance secretary, said the country would benefit enormously once independence had time to take hold and her government had full control of its economy. Denmark’s economy of similar size was 20% larger per capita than that of the UK and 40% larger than Norway.
He said EU membership had helped transform the Irish economy (Ireland joined the then European Communities in 1973, the same year as the UK, 50 years after independence), and the EU market was seven times greater than that of the UK.
“In the real world, through its membership of the EU, independent Ireland has dramatically reduced its trade dependence on the UK, diversifying into Europe and in the process its national income per capita has surpassed that of the UK,” he said. .
“With our financial resources and advantages, control of economic policy and membership of the EU, Scotland would be very well positioned to grow the economy.”
George is Digismak’s reported cum editor with 13 years of experience in Journalism