THINGS aren’t going well for the new Labour Government. The figures for the first quarter of their tenure of the economy say it is pretty much flatlining – growth of one-tenth of 1%.

Not good news for a crew whose only mantra seems to be growth, growth, growth.

Some have pointed out this might in part be a consequence of Labour’s talking up economic gloom and doom. One big factor in the economy is the willingness and capacity of people to part with their money in shops and elsewhere. The “things can only get worse” message will induce caution in even the most enthusiastic of consumers as people hold on for rainy days ahead.

The UK economy is integrated into a global capitalist system so it will be affected by world events the same way as other developed countries. But individual countries can take decisions that either mitigate or worsen the effects of worldwide economic turbulence. That’s why there are variations in economic performance and relative national wealth between countries.

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So why is it that the UK economy is currently growing at a quarter of the European average? What possible decision might have been taken here to make things worse? The answer is Brexit.

Brexit is bad for us – there’s not really an argument or discussion any more, but an uncontested fact. Just how bad is a matter of disagreement; opinion is divided. The well-respected National Institute of Economic and Social Research (NIESR) reckons the UK economy would be 2.5% bigger now if we had remained in the European Union.

In fairness, that’s probably at the lower end of the estimates. According to Goldman Sachs, Britain’s decision to leave the EU has hampered the economy to the tune of 5% versus other comparable countries. Loads of other experts have pitched in; none has suggested the economy has got better.

So, a hit of somewhere between 2.5% and 5% of GDP. In real money, that’s between £55 billion and £110bn. Call it five black holes.

The damage done by Brexit results from three key factors: reduced trade; weaker private investment, and lower immigration from the EU. All of these are damaging the Scottish economy too. Last week’s Constitution, Europe, External Affairs and Culture Committee of the Scottish Parliament heard just how much.

Boris Johnson’s Trade and Cooperation Agreement came into force in May 2021 and allows free trade without quotas or tariffs. But it doesn’t do anything about non-tariff barriers; checks and paperwork which make a once frictionless process costly and cumbersome.

The EU requires all imports to meet their quality and safety standards, not unreasonably. Since Brexit, the only way to make sure they do is to physically check what is passing across the border. That takes time and money. And it is this that is pushing up prices and slowing down exports.

Salmon Scotland, for instance, reported that while more than 53,000 tonnes of Scottish salmon was exported to the EU in 2019, this had reduced to around 44,000 tonnes four years later. They estimate this represented a loss in export value for Scottish producers in the region of £80 million-£100m.

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Andrew Bailey, governor of the Bank of England, pointed the finger at Brexit last week.

Chancellor Rachel Reeves agrees – yet she refuses to countenance not only rejoining in years to come, but ever participating in the single market or customs union. God only knows what particular demons she is still trying to exorcise from the Labour playbook, but Labour’s stance on Brexit defies common sense, the wishes of unions and business, and even popular opinion.

It is really hard to know what Labour are scared of. I get that it would be difficult to get back into the EU, but the process of building the goodwill that will enable it to happen in the next decade ought to begin now. One way to do that would be to commit to alignment with single market standards so that a deal might be struck as the TCA is reviewed to dispense with paperwork and cut costs. But even this seems too Europhilic for the new Labour Government.

The Scottish Government is committed to align with the EU where appropriate and has commissioned experts to report on how it can. In two reports over the last year, Dr Lisa Whitten from Queen’s University Belfast says there has not been significant divergence between Scots law and EU law. The problem is this only refers to devolved matters, which exclude trade. So full implementation of the alignment policy in Scotland could only ever partially mitigate any regulatory divergence between the UK and the EU.

Which is, of course, an argument for control over these matters passing to the Scottish Parliament through the process of political independence. With Labour so firmly set against any formal participation in European trading arrangements, this option would offer Scotland’s exporters the best hope for the future.

And with Donald Trump about to implement a fortress America policy with tariffs and protectionist barriers erected against us, Scotland looking eastwards to the European mainland makes more sense, and is more urgent than ever.