The University of Strathclyde's Fraser of Allander Institute has considered a rage of scenarios to gauge the economic impact over a ten-year period from Scotland leaving the European Union (EU).
Their conclusion is that Scotland's economy could lose up to 80,000 jobs if the UK Government pursues a “hard” Brexit, which would see the UK stand firm on immigration controls and end the European Court of Justice's jurisdiction in the UK.
Freedom of movement is a requisite of single market membership.
Fraser of Allander's modelling outlined the potential impact using the World Trade Organisation (WTO) model, which would apply if the UK left the single market and was subject to WTO rules for international trade. Under this scenario, Scottish Gross Domestic Product (GDP) is expected to be more than 5% lower - £8,000 million in 2015-16 terms - than if Brexit didn't happen, with exports falling 11% per cent after 10 years. Real wages will also fall by around 7%; equivalent to around £2,000 per year for someone on average full-time earnings and employment will drop 3%, or by around 80,000 jobs.
The most optimistic scenario, which would see the UK adopt an EU trade agreement similar to what Norway has, would give the UK membership of the European Economic Area and full access to the single market but outside the customs union. Under this model, Scottish GDP would fall by between 2 and 3% over 10 years, employment decline by around 30,000 and wages by 3 and 4% - £800 to £1,200 a year.
Professor Graeme Roy, director of the Fraser of Allander Institute, said:
“This report provides the first detailed assessment of the possible impact of Brexit on the Scottish economy. It shows that, under all modelled scenarios, Brexit is likely to have a significant and negative impact on the Scottish economy. The range of possible outcomes is driven by the nature of any post-Brexit relationship between the UK and EU, with the weaker the economic integration the greater the negative impact.”
Commenting, Kenneth Gibson added:
“This report paints a grim picture of Scotland's economy ten years after Brexit. Maintaining access to the single market is critical for business and industry in Scotland.
“If the UK Government leads us into a 'hard Brexit', the evidence presented in this report indicates that there could be disastrous consequences for jobs, exports and production. Business and workers face an uncertain future and national income, wages and employment are all predicted to fall regardless of the route the UK takes to leave the EU. To secure our economic prosperity, Scotland must therefore continue the fight to remain.”