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More time may be needed

Call to extend Brexit talks to ensure ‘smooth transition’

A “no deal” exit from Europe is vital for business and more time should be given to achieve an orderly departure if needed, according to Scottish analysis.

The Fraser of Allander Institute says securing a smooth Brexit transition is ‘vital’ to protect Scotland’s growing economy – even if that means extending the Article 50 negotiation period.

In its latest Economic Commentary the Institute says Scottish GDP grew by 0.5% in the second quarter of 2018. This is in line with its prediction of a more optimistic outlook for 2018 and is the second quarter in a row Scotland has outpaced UK growth. 

Despite these positive figures the Institute emphasised the continuing fragility of the Scottish economy and stressed the importance to the UK economy of securing an orderly transition upon leaving the EU in March 2019 to avoid potentially damaging disruption to business. 

Professor Graeme Roy (pictured), director of the institute, said: “Whether you agree or disagree with the decision to leave the EU – and irrespective of the nature of the final settlement – it is essential that we have an orderly transition.

“To enable firms to prepare and develop contingency plans it is vital that a deal is reached. Should this require more time to negotiate a workable solution then so be it.

“Extending the Article 50 negotiation period – but maintaining the same transition timescale to 2020 – may be unpalatable for some but could be essential to protect jobs and livelihoods.”   




The report says that recent Scottish growth has been relatively broad based with a particularly strong performance in manufacturing, which has been boosted by Scotland’s food and drink industry, and tourist-related activities.

The oil and gas sector has also recovered steadily with Brent crude now trading at around $80 a barrel, much higher than the $30 per barrel seen in 2016.

However, growth is likely to remain below trend as many of the structural challenges Scotland faces, such as weak productivity growth, still remain. 

The Institute predicts Scottish GDP will grow by 1.3% this year and 1.4% in 2019, although the economists also highlight the high degree of uncertainty surrounding the forecast at the current time. 

Professor Roy said: “The latest data confirms a welcome pick-up in activity in the Scottish economy.

“As we outlined in June, assuming that a broad agreement on Brexit can be struck, we are cautiously optimistic about prospects for this year and next.

“However, the greatest risk to this assessment is the possibility of a ‘no-deal’ outcome to the Brexit negotiations.

“Our latest work shows that most businesses in Scotland are unprepared for Brexit, with the lack of certainty over any final deal being a key stumbling block.




“As the Chancellor, Governor of the Bank of England and head of the IMF have all warned, leaving the EU in March next year with no agreement in place has the potential to cause serious disruption to the UK and Scottish economies.”

Scottish Liberal Democrat leader Willie Rennie said: “Theresa May has confirmed ‘no-deal’ is now a real option. That’s a disastrous outlook for Scotland and the UK as a whole.

“This report confirms it will be businesses and families that bear the brunt of these senseless decisions.

“The best thing for jobs and livelihoods is preserving the close ties with Europe we’ve benefited from for decades. Nicola Sturgeon and Richard Leonard need to step up, put the country first and back a people’s vote on the final deal.”



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