Scottish economy 'moving closer to EU' By Douglas Fraser

Business and economy editor, Scotland Published duration 8 April 2019

image copyright Getty Images image caption Food and drink exports to the EU have been growing

Scotland's economy has been growing more interlinked with that of the European Union as a whole since the Brexit referendum.

That's according to a report by the Fraser of Allander Institute, which updates an analysis carried out for the GMB union and published in November 2017.

That previous report showed 135,000 jobs were linked to demand from the European Union for Scottish exports.

That relates to £14.9bn-worth of goods and services sold to the other 27 member states.

The update, published by GMB on Monday, shows a further 9,000 jobs are tied to that trade, taking it to 144,000.

Food and drink

The biggest growth sectors for EU exports have been in petroleum and in food and drink.

The report also emphasises how much more exports of services have grown, up 98% since 2002.

By contrast, manufacturing exports are nearly 80% more valuable than services (£8.9bn, to £5bn), but only 3% higher than they were 17 years ago.

Exports were given a fillip after the June 2016 vote, when the value of sterling fell.

The price of oil has also risen significantly since 2016. At the time of the referendum, a barrel of Brent crude oil was trading below $50. After a surge in price last year, it fell during winter, and ended last week above $70 for the first time since November.

In other work carried out by the Fraser of Allander Institute at Strathclyde University, Brexit could have the effect of reducing employment by between 30,000 and 80,000 jobs in Scotland over the next decade.

'Honest analysis'

Gary Smith, Scotland secretary of GMB, commented on the most recent report: "Let's be clear that for Scotland, the best Brexit would be no Brexit at all, but in the absence of that, there needs to be an honest analysis of our future prospects."

He said the report's findings "are the hard facts facing Scotland, so this week we should not entertain any nonsense from Brexit cheerleaders about 'taking back control' or a 'jobs first Brexit' - even at the eleventh hour, the very least those driving us over the cliff-edge can do is tell the truth".

The "jobs first Brexit" is the slogan used by Labour leader Jeremy Corbyn. Mr Smith has been critical of the leadership's approach to Brexit and its potential economic effect.

The union secretary said the "price of political failure will likely be measured in divestment, redundancies and closures across Scotland - a new era of economic and industrial decline that will take hold over the next few years and take a generation from which to recover".

Other findings in the update from the Fraser of Allander Institute are that there remain few overall, significant differences between Scotland and the rest of the UK in its exposure to the effects of Brexit - except that some sectors have a bigger role in the Scottish economy, including drinks manufacturing and fisheries.

The authors of the report say the eventual outcome of Brexit will depend on future policy responses of government, and the opportunities that may arise to export to non-EU markets.

They advise government, trade unions and businesses to develop contingency plans for different outcomes.

"At the same time, it is important that our economy has come through upheaval before and there will be economic opportunities in the months and years ahead. Identifying such opportunities and being flexible enough to respond as they emerge will be just as important".