‘Events may have implications for Scotland’s economy’
THIS week’s tumultuous political events are highly likely to have significant implications for Scotland’s economy.
Arguably, the publication of the Draft Withdrawal agreement was an attempt to reconcile the un-reconcilable. Any Strathclyde undergraduate who has taken a class in International Trade will tell you that if a country wishes to be outside a trading bloc’s common tariff regime, an economic border with customs controls is required.
After two-and-a-half years of debate, this basic economic reality has not been reconciled with the political reality of the Irish border question. But it is vital that a comprehensive deal is reached on the UK’s economic future with the EU.
Most economists share the view that integration with your nearest trading partners helps support faster economic growth. It opens up opportunities for exports, deepens supply chains and incentivises international investment.
Being a member of the European Union has also helped to support migration into Scotland, something that will be of increasing importance in the years ahead as our population ages. A steady inflow of European workers has also helped collaboration and growth across a wide range of sectors, from universities, to tourism, to Scotland’s food and drink sector.
It is only now that many businesses are beginning to realise the potential implications of a hard Brexit for their own day-to-day operations. However, it is the risk of no deal at all that is of greatest concern.
Whether you agree or disagree with the decision to leave the EU – or with the final agreement the UK negotiates with the EU – the need for an orderly transition is vital. Crashing out of the EU with no effective plan in place has the potential to cause significant long-term harm to Scotland’s economy.
As both the Chancellor of the Exchequer and the Governor of the Bank of England have pointed out, a no-deal outcome will cause hardship for many firms, workers and families across the UK. Sleepwalking into a no-deal outcome cannot be viewed as a responsible economic plan.
Now is the time for effective and strong leadership from all our politicians.