No deal Brexit ‘could force Scotland into recession this year’ The report by Scotland’s chief economist makes a series of dire predictions

A no-deal Brexit could force the Scottish economy into recession this year, cut GDP by 7 per cent and lead to a surge in unemployment, an official report will warn on Thursday.

The value of the pound could also fall by 30 per cent if the UK leaves the EU without a deal on 29 March, the document by the Scottish Government‘s chief economic adviser says.

“Collectively, the above pressures have the potential to push the Scottish economy into recession during 2019″ The i politics newsletter cut through the noise Email address is invalid Email address is invalid Thank you for subscribing! Sorry, there was a problem with your subscription. Dr Gary Gillespie

Dr Gary Gillespie’s report, which models two possible no-deal scenarios, also predicts that disruption to trade could hit Scottish exports by up to 20 per cent.

The first scenario considers the impact of short-term disruption to supply chains over a number of months, while the second looks at an extended period of disruption.

The report warns that business investment in Scotland could fall by £1bn by the end of 2019, with net migration into the country likely to slow significantly and possibly go into reverse.

The unemployment rate is also forecast to rise from the current level of 4 per cent to between 5.5 per cent and 8 per cent, the equivalent of up to 100,000 people being made jobless.

“Collectively, the above pressures have the potential to push the Scottish economy into recession during 2019,” Dr Gillespie’s report adds.

“Based on the response to the Scottish and UK economies to previous economic shocks, there is the potential for GDP to contract by between 2.5 per cent and 7 per cent by the end of 2019.”

Deadline extension

Economy Secretary Derek Mackay said all forms of Brexit would result in lower household incomes north of the border.

“There will be severe impacts for the economy, and for people and businesses across Scotland, under a no-deal Brexit and these impacts have the potential to push the Scottish economy into a deep recession, similar in scale to the financial crash of 2008,” he added.

The Scottish Government is urging Theresa May to extend the Article 50 deadline beyond 29 March but has also been ramping up its contingency planning in the event of no agreement being reached.

Speaking in the House of Commons on Wednesday, Scottish Secretary David Mundell said he was “very clear about the implications of no deal for Scotland and the UK”.

He added: “There’s one sure and clear way to avoid a no-deal Brexit and that is to vote for the Prime Minister’s deal, but on every occasion that the SNP have had to do that, they have declined.

“Indeed, what they have sought to do is to bring a no-deal Brexit closer to reality.”

A UK Government source added: “This report shows how utterly irresponsible it is of the SNP to support a no-deal Brexit.”