Nation faces £3 billion Brexit hit

Scotland’s beleaguered economy could be facing a £3 billion hit if the UK does not extend the Brexit transition period beyond the end of this year, a new report today finds.

Scottish GDP could be up to 1.1 per cent lower after two years as a result of the loss of economic activity from leaving the EU, it adds. This would be on top of the impact of the Covid-19 lockdown which has seen the economy grind to a halt.

But the UK government insisted last night ruled out an extension, insisting it would only “prolong” Brexit negotiations.

The Scottish Government report indicates there will be further major costs from Brexit for years to come.

It also highlights that without an extension or having a free trade deal in place, Scotland’s agriculture, fisheries and manufacturing sectors will be especially badly hit.

The transition period is due to end on 31 December. The UK government must request an extension by the end of June from EU, but has so far ruled this out.

The Scottish Government’s Constitution Secretary Michael Russell said it would be an “act of extraordinary recklessness” for the UK government to maintain this position.

He said: “Time is running out and now is the time to speak up to avoid a double disaster. The impacts of leaving the Single Market – whenever we leave – are bad for our economy in the long term. The UK government should do the responsible thing and rule out now a disastrous ‘no deal’ outcome.”

But Scotland office minister David Duguid said: “Extending the transition period would simply prolong the negotiations and increase uncertainty for business. It would bind us into future EU legislation, without us having any say in designing it, but still having to foot the bill as we would still have to make payments into the EU budget.”