'Hard Brexit' Could See 80,000 Jobs Put At Risk

6 October 2016, 06:32 | Updated: 6 October 2016, 07:32

Up to 80,000 jobs in Scotland could be put at risk if the UK Government pursues a "hard'' Brexit, according to a new report.

Researchers at Strathclyde University's Fraser of Allander Institute looked at different scenarios for the economic impact of leaving the European Union (EU) on Scotland over a ten-year period.

They concluded the most severe impact would come under a World Trade Organisation (WTO) model, which would apply if other deals could not be secured and would see the UK subject to WTO rules for international trade.

Under this model, researchers said Scottish GDP was expected to be more than 5% (or £8 billion in 2015-16 terms) lower than would otherwise be the case and exports down by more than 11% after around 10 years.

Real wages would decrease by 7%, equivalent to around £2,000 per year for someone on average full-time earnings, while the number of people employed was forecast to be 3% lower - representing around 80,000 jobs.

The most optimistic scenario was the Norway model, under which the UK would have membership of the European Economic Area and full access to the single market, but be outside the customs union.

However, this would still result in Scottish GDP being between 2% and 3% lower after 10 years, with a 1% to 2% reduction in the employment level, equivalent to the loss of at least 30,000 jobs.

The report also concluded the impact of Brexit on the economy of the rest of the UK would be more severe, with an increase in net migration into Scotland from other parts of the country as a result of the shock acting as a "cushion'' north of the border.

Researchers have called for a focus on sectors that have close trading links with the EU such as food, drink and some manufacturing sectors to fully understand the issues they face.

Professor Graeme Roy, director of the Fraser of Allander Institute, said: "This report provides the first detailed assessment of the possible impact of Brexit on the Scottish economy.

"It shows that, under all modelled scenarios, Brexit is likely to have a significant negative impact on the Scottish economy.

"The range of possible outcomes is driven by the nature of any post-Brexit relationship between the UK and the EU - the weaker the economic integration with the EU, the greater the negative impact.''

The report was prepared for Holyrood's Europe and External Relations Committee, which is conducting an inquiry on the implications for Scotland of the EU referendum.

Committee convener Joan McAlpine said: "This report paints a grim picture of Scotland's economy ten years after Brexit.

"Our committee has already found that maintaining access to the single market is key for business and industry in Scotland.

"If the UK Government leads us into a 'hard Brexit', the evidence presented in this report indicates that there could be disastrous consequences for jobs, exports and production.''

Deputy convener Lewis Macdonald added: "Business and industry leaders and workers face an uncertain future according to this evidence.

"GDP, wages and employment are all predicted to fall regardless of the route the UK takes to leave the EU.''

A Scottish Government spokesman said: "What this report confirms is what the Scottish Government has been saying since June - that the threat of being taken out of Europe poses huge risks to Scotland's economy.

"Analysis shows that taking Scotland out of the European Union and our place in the world's biggest single market is projected to cost the Scottish economy up to £11.2 billion per year by 2030.

"We will continue to act to make Scotland as competitive as possible and our first priority is working towards maintaining our relationship with the EU, along with all the benefits that brings, not least continued membership of the single market.''

A UK Government spokesman said: "As the Prime Minister and Secretary of State for Scotland have said, the UK Government will seek a bespoke deal that will bring new opportunities.

"As the report itself recognises, we have not begun negotiating our exit from the EU, so it seems very premature to draw conclusions from some highly speculative models. We are determined to get the best deal possible for the whole of the UK in the negotiations.''