‘Immediate’ threat to Scots economy

A no-deal Brexit could have “immediate, real and adverse impacts” on trade in Scotland, a new report has warned.

Experts at professional services firm EY have warned of the consequences of the UK leaving the European Union without a deal and having to resort to trading on WTO terms.

It comes as the UK Government is stepping up its preparations for a possible nodeal Brexit, with new Prime Minister Boris Johnson having pledged the UK will be out of the EU by 31 October “do or die”.

The report also warned skills shortages could increase in part due to a fall in migrant workers coming to Scotland, with this “connected to the challenges created by Brexit”. It forecast that 2019 “looks set to be a disappointing year”, with economic growth in Scotland, excluding the oil and gas sector, predicted to fall from 1.3 per cent in 2018 to 1 per cent. The report added: “Overall, Scottish growth between 2019 and 2022 will be slightly weaker than for the UK as a whole.”

A no-deal Brexit continues to be the “most obvious” risk to the economy, with the EY Scottish ITEM Club summer forecast stating: “Even if a deal is agreed in the coming months, there will still be difficult trade negotiations to follow - while other global worries mean Scottish companies are likely to remain very cautious in their investment and employment decisions.”

Unlike the UK - where GDP growth fell from 1.8 per cent in 2017 to 1.4 per cent in 2018 - Scotland avoided a marked economic slowdown last year. This was in part due to a “manufacturing miniboom” north of the Border, although the report warned this “looks unlikely to persist through 2019”.

With the world economy expected to grow more slowly this year, EY said Scotland was “likely to share in the global pattern”.