ANOTHER warning has been made about the consequences for the Scottish econ-omy of a no-deal Brexit – this time from employers’ organisation CBI Scotland, which said the country would face a multi-million pound blow because of the collapse of international trade deals.
With such an exit appearing ever more likely as we approach March 29, the body is highlighting the damaging implications for businesses across the UK of crashing out of the trade agreements that European Union membership offers.
CBI Scotland said the “extensive agreements” cover around 70 countries and it estimated 37% the total amount of global gross domestic product (GDP) is covered by the EU and countries it has deals and partnerships with.
It said in Scotland, exports to countries with EU free trade agreements accounted for almost 14% of the nation’s exports – worth nearly £3.9 billion every year, which equated to the annual salaries of 114,000 teachers.
According to the organisation, Scotland exports £790 million worth of goods to Norway each year and £690m to South Korea under these arrangements, with the machinery, transport, beverages, tobacco and mineral fuels sectors among the most exposed.
If the UK leaves Europe without a deal, these exports risk having immediate tariffs imposed overnight, which would cost the Scottish economy millions of pounds.
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CBI Scotland director, Tracy Black, said: “If the UK leaves the EU without a deal, overnight businesses in Scotland could cease to enjoy the benefits of tariff-free trade with, and easy access to, crucial markets for products and services, from Canada to South Korea.
“Many firms are unaware that it’s not just their relationships with EU customers at risk from a no-deal Brexit, but relationships across the globe.
“Individual businesses trading with markets outside the EU would face tariffs worth millions of pounds being slapped on them instantaneously.
“These trade deals span five continents and are vital for the smooth export of our goods and services.
“Exports to countries with EU free trade agreements are worth almost £3.9bn to Scotland every year.
“The risk to these deals is an overlooked danger to our economy and yet another reason why no deal is not an option for the UK and jeopardises jobs in our communities.
“It is vital compromise is shown on both sides of the Channel and politicians work quickly to come to a deal.”
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The warning followed news that the Scottish economy could be pushed into recession if the UK leaves the EU without a deal.
Scotland’s top economic adviser set out the impact of short-term disruption to supply chains over a number of months, and also considered an extended period of disruption.
Among the potential risks of a no-deal outcome, the report by Dr Gary Gillespie suggested Scotland’s GDP could fall by up to 7%.
Trade with the EU was also expected to be “significantly impaired”, with a forecast for a potential drop in Scottish exports of between 10% and 20%.
A predicted fall in exports and overseas investment, coupled with a broader economic slowdown, is suggested to result in a depreciation in sterling of between 10% and 30%.
His State of the Economy report also highlighted that even if the UK reached a Canada-style trade agreement with the EU, the value of goods and services produced in Scotland would take a big hit.
Gillespie said: “A no-deal Brexit remains a significant (and live) risk and would lead to a major dislocation.”
Earlier warnings came from First Minister Nicola Sturgeon, and her Welsh counterpart, Mark Drakeford, who said a no-deal Brexit would be a “catastrophe”.
READ MORE: Fear that a no-deal Brexit ‘could push Scotland into a recession’
They urged the Prime Minister to drop the option and to extend the Article 50 deadline.
Mike Russell, Scotland’s Brexit Secretary, said as many as 100,000 Scots could lose their jobs in the event of a no-deal exit and Rural Economy Secretary Fergus Ewing said the seafood industry would face a disastrous increase in costs in that eventuality, with salmon producers alone facing extra charges of £15m a year for export health certificates.
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