Refusal to extend Brexit transition could cost billions, warns Scottish Government
Scotland’s GDP could fall by up to £1.8bn if the UK Government refuses to extend the Brexit transition period, according to new analysis by the Scottish Government.
The UK left the EU on 31 January, but under the transition agreement most arrangements were retained, including membership of the customs union and single market, while the UK and EU negotiate a new deal.
With the Brexit transition period due to end on 31 December, the UK Government has until the end of June to request a two year extension.
But while UK ministers are adamant the UK will leave the bloc at the end of the year, a new study from the Scottish Government has found that if an extension is not agreed, Scottish GDP could be up to 1.1 per cent lower after two years.
The paper indicates there will be further major costs from Brexit for years to come and also highlights that without an extension or having a free trade deal in place, Scotland’s agriculture, fisheries and manufacturing sectors will be left at risk.
Cabinet Secretary for Constitution, Europe and External Affairs Michael Russell said: “The paper we are publishing today suggests if there is no extension, then even if a basic trade deal can be reached with the EU by December, there will be a cumulative loss over just two years of nearly £2 billion, rising to almost £3 billion if there is no deal.
“And the actual impact will be worse because the Brexit shock would come hard on the heels of coronavirus hitting businesses at their most vulnerable and giving business and government, currently rightly focussed on this pandemic, insufficient time to prepare.
“The Scottish Government itself has been entirely focussed on helping people in Scotland through the coronavirus crisis, and extending the transition period should be seen is an essential component of the economic recovery. 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.”