Nicola Sturgeon’s plans for Scottish independence were dealt a savage blow today as a new study revealed leaving the UK would damage the nation’s economy more than Brexit – and rejoining the EU would make little difference.
The economic damage from leaving both unions would be the equivalent of an income loss of between £2,000 and £2,800 per person, according to an analysis of trade by the London School of Economics (LSE).
Academics from the LSE’s Centre for Economic Performance say the economic costs of independence are two or three times greater than Brexit due to the volume of Scotland’s trade with the rest of the UK.
The report concludes the losses from independence are similar regardless of whether an independent Scotland rejoins the EU or maintains a common market with the UK.
They found that together, Brexit and independence (without rejoining the EU) are estimated to reduce long-run Scottish income per capita by around 6.5 per cent in an optimistic scenario and 8.7 per cent in a pessimistic scenario.
However, they said these were both likely to be underestimates as there could also be impacts on productivity.
The report comes amid efforts by Ms Sturgeon and the SNP to bounce Boris Johnson into agreeing a new independence referendum, seven years after Scotland voted to remain part of the UK.
Mr Johnson has consistently said that the 2014 vote was a’once in a generation’ event, as agreed by nationalist leaders at the time.
Academics from the LSE’s Centre for Economic Performance say the economic costs of independence are two or three times greater than Brexit due to the volume of Scotland’s trade with the rest of the UK
The report concludes the losses from independence are similar regardless of whether an independent Scotland rejoins the EU or maintains a common market with the UK
The LSE team did not consider other effects of independence such as changes in investment flows, fiscal arrangements or Scotland’s currency.
As the rest of the UK accounts for more than 60 per cent of Scotland’s imports and exports, they noted, the impact of any trade barriers would be far greater than those between Scotland and the EU.
The rest of the UK would be likely to remain Scotland’s largest trading partner for decades after independence, they said, meaning that rejoining the EU would only become attractive if independence damaged trade south of the border to a sufficient degree.
Authors Hanwei Huang, Thomas Sampson and Patrick Schneider said the economic impact of Brexit would become clear after 10 to 15 years, but the economic impact of Scottish independence could take even longer to gauge.
Their report said: ‘Adjustment to Scottish independence is likely to be even slower and may take a generation or more, as border costs gradually increase due to divergence between economic policy and regulations in the two countries and the erosion of existing cultural, social and business ties.
‘This slow adjustment means that in the initial decades after independence the rest of the UK will continue to be Scotland’s most important trade partner.
‘Consequently, even if in the long run there is an economic case for an independent Scotland to rejoin the EU, we conclude that Scotland’s medium-run priority following independence should be keeping border costs with the rest of the UK as low as possible.’
Prof Huang said: ‘This analysis shows that, at least from a trade perspective, independence would leave Scotland considerably poorer than staying in the United Kingdom.
‘While many considerations will play a role in shaping the outcome of a second referendum, voters need to know what the likely costs and benefits of each course will be.
‘This briefing contributes to that knowledge.’
Prof Sampson said: ‘We find that the costs of independence to the Scottish economy are likely to be two to three times greater than the costs of Brexit.
‘Moreover, rejoining the EU following independence would do little to mitigate these costs, and in the short run would probably lead to greater economic losses than maintaining a common economic market with the rest of the UK.’
The Scottish Government’s Economy Secretary Fiona Hyslop responded to the report, saying: ‘As an independent member of the EU, free from the damage of Brexit, Scotland would be part of the huge Single Market which is seven times the size of the UK.
‘There is no reason whatsoever that Scotland could not emulate the success of independent countries of our size which are far wealthier per head than the UK.
‘Denmark’s GDP per head is around 20 per cent higher than the UK’s and Norway’s is nearly 40 per cent higher.
‘In the real world, through membership of the EU, independent Ireland has dramatically reduced its trade dependence on the UK, diversifying into Europe and in the process its national income per head has overtaken the UK’s.’
She continued: ‘The study is also clear that it takes no account of any changes in migration policy, inward investment or any economic levers the Scottish Government would have control of in an independent Scotland to do things better and boost the economy.
‘With our economic resources and advantages, control of economic policy and membership of the EU Scotland would be very well placed to grow the economy.
‘It is still too early to calculate the long-term damage that Brexit will do to Scotland’s economy, but the disruption it is already causing is deeply concerning.’
Wave the flag and dress smartly at the Centotaph to win back the Red Wall: Labour urges Keir Starmer to embark on a ‘patriotic’ plan and pose with army veterans amid fears voters believe he ‘sits on the fence’ on critical issues
Keir Starmer should pose with the union flag and military personnel to reconnect Labour with traditional voters, according to a leaked ‘rebranding’ plan.
The strategy, presented to officials by the party’s head of research last month, stresses the need for a more patriotic image in the wake of the disastrous Jeremy Corbyn era.
It suggested Sir Keir makes ‘use of the flag, veterans’ to convince disaffected former voters that Labour reflects their values.
There was also a reference to ‘dressing smartly at the war memorial’ – an apparent swipe at Mr Corbyn notoriously wearing a scruffy-looking anorak to the Cenotaph wreath-laying in 2018.
In a warning sign for Sir Keir, although he is seen as a positive asset for the party focus groups showed voters have noticed his habit of ‘sitting on the fence’.
The Labour leadership seem to have taken the advice to heart already, with Sir Keir seen against the backdrop of the union flag for speeches and party political broadcasts over recent weeks.
Meanwhile, Sir Keir looks to be trying to shake off his reputation for facing both ways on issues like Brexit, including by demanding blanket Covid ‘quarantine hotel’ rules for UK arrivals, and making a bold call for teachers to be prioritised for vaccinations over half-term.
The Labour leadership seem to have taken the rebranding advice to heart already, with Sir Keir Starmer seen against the backdrop of the union flag for speeches and party political broadcasts over recent weeks
Labour insisted the presentation was based on in-depth research by the Republic agency dating from September, and was not written by party officials.
However, sources praised the report as a ‘really interesting and strong piece of work’.
A Labour spokesman said: ‘This is a report by an external organisation from September 2020 dealing with pre-existing perceptions of the party.
‘It was not written by Labour officials. Keir Starmer and Angela Rayner have been very clear that Labour has a mountain to climb to win in 2024 but is on the right path.’
According to the Guardian, party officials were told during the presentation last month that voters were confused about ‘what we stand for, and what our purpose is, but also who we represent’.
Comments from focus groups included that Sir Keir ‘needs to stop sitting on the fence’.
His tendency not to take a firm stance has fuelled a perception that Labour is ‘not being forthright and honest … about where we want to be’.
One Birmingham voter slapped that it was ‘two different parties under one name’, while in another damning sign of the Corbyn legacy a Grimsby resident said: ‘They are the voice of the students. They have left real people, taxpayers behind.’
The report was based on focus groups from Watford to Grimsby conducted in September along with nationwide polling.
One slide said ‘communicating Labour’s respect and commitment for the country can represent a change in the party’s body language’.
Another recommendation was: ‘The use of the flag, veterans, dressing smartly at the war memorial etc give voters a sense of authentic values alignment.’
Mr Corbyn’s record of having campaign for unilateral disarmament and against all major British military interventions since the Second World War was seen as toxic for Labour during his time in charge.
It culminated in Boris Johnson winning an historic majority by demolishing the party’s traditional ‘Red Wall’ heartlands.
This week Sir Keir fronted a party political broadcast beside a union flag, as he promised to ‘rebuild our country’.
The party is also believed to be using flag-branded header images in emails more often.
However, the approach has sparked alarm from some on the Labour Left.
Norwich MP Clive Lewis, himself a former soldier, told the Guardian: ‘The Tory party has absorbed Ukip and now Labour appears to be absorbing the language and symbols of the Tory party.’
He added: ‘It’s not patriotism; it’s Fatherland-ism. There’s a better way to build social cohesion than moving down the track of the nativist right.’