Report outlines how independent Scotland may join EU to 'undo damage of Brexit'

Economists at the University of Groningen in the Netherlands used state-of-the-art modelling to look at the impact of Brexit on trade for the UK and devolved nations.

While the Covid crisis affected international trade, the consequences of Brexit has made the situation “even worse for the UK”, the research found. But if Scotland was able to rejoin the EU following independence the positive effects would be enough to overcome Brexit-induced losses and even slightly increase trade.

The findings are in contrast to a report earlier this year from the London School of Economics which concluded going back into the EU would “do little” to mitigate the costs of Brexit if Scotland left the UK.

The new report, published by global independent research network CESifo, also cautions the feasibility of a newly independent nation – such as Scotland signing a trade deal with the EU – is not “set in stone” and any gains would depend on the extent of reintegration with the European single market.

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Report co-author Dr Tristan Kohl, associate professor of international economics at the University of Groningen, said: “Suppose we live in a world where this is possible and Scotland can accede as a new member state to the EU. This would undo the damage of Brexit and maybe even increase trade by up to 1%. 

“It is a big effect to undo the damage of Brexit – then our analysis also gives a very small positive result because of a very small trade-creation effect.”

THE study found Brexit had resulted in a decline of around minus 19% for trade for England, minus 10.8% for Scotland, minus 10.2% for Wales and minus 6.6% for Northern Ireland.

In a scenario where Scotland became independent with the free trade agreement with the UK “ripped up” and had no deals with any other countries, then there would be a further decline to minus 16.1%.

Kohl said: “It is interesting to also compare our results to one other recent study which came out from colleagues at the London School of Economics, who take a somewhat different approach.

“We agree with each other in that independence of Scotland and other devolved nations would be even more harmful than the damage that Brexit itself imposes on the devolved nations. But they find that even with EU membership, the Scottish economy would not be in a better position. So our results are more positive compared to these other results. “Across the board we can agree even these small positive results we find are conditional on knowing there is fully fledged EU membership again.”

THE analysis looked at the impact of Brexit on trade for the UK to date, attempting to separate it from the effects of Covid.

Kohl said: “The key challenge for us as economists is to disentangle what is the effect that is driven by Brexit and what is the Covid effect.

“We have a ‘back of the envelope’ method to get an idea of how significant the effect of Brexit is in addition to the effect of Covid – and not surprisingly we find the additional impact of Brexit is more severe than just the Covid crisis.

“Covid was bad for everyone, but Brexit makes things even worse for the UK. This is in line with our previous expectations.”

The study also concluded the idea of a “Global Britain” signing new trade agreements around the world will not bring create sufficient trade to compensate for Brexit.

Kohl said: “The most important [free trade agreement] which is on the list for the UK to try and negotiate is an agreement with the United States – we have confirmed that result in this paper, but we also know that from previous research we published.

“That deal is not going anywhere fast, that is the political reality. 

“So then what is left on the Global Britain agenda is the need to sign agreements with all other trade partners around the world. 

“But our results show even that were the case, even if the UK were to sign these comprehensive trade agreements with the majority of the most economically important ones that we include in our data, the results will still not be enough to offset the loss of EU market access.”

Dr Philippa Whitford (above), the SNP’s Europe spokesperson at Westminster, said the research emphasised a key point that Scotland be able to escape the damage of Brexit by becoming independent.

“The reality is that Brexit has been an unmitigated disaster and a nightmare for Scotland’s economy, businesses, jobs and people’s livelihoods,” she said.

“We are already witnessing the impact Brexit is having; severe staff shortages, empty supermarket shelves, and a fuel crisis – with warnings that some of these issues are likely to get worse in the coming months.

“As the research also points out, the Tory rhetoric of Global Britain and post-Brexit trade deals will be ‘insufficient’ to make up for the loss of trade already caused by Brexit.” 

She added: ”It’s beyond any doubt that the only way to escape the damage of Brexit and to rejoin the EU, and secure freedom of movement which has contributed so much to our economy and communities, and our place in the world’s largest single market, which is seven times bigger than the UK – is to become an independent country.”