MSPs and industry figures meet to weigh cost of Brexit on Scottish economy

Nathanael Williams

With the Scottish Government weighing up its Brexit options, Holyrood consults business and academia

Universities Scotland, the Scotch Whisky Association, the STUC and the Fraser of Allander Institute will give evidence to the Scottish Parliament's European and external relations committee this week as the Brexit fallout continues.

The purpose of the committee meeting is to hear views from economists, business leaders, financial services, food and drink companies and higher education professionals who will outline the impact of the Brexit vote on Scotland.

The committee recently returned from a trip to Brussels on 19 July and is, unusually, meeting during the parliamentary recess, stressing the urgency of the economic and constitutional dilemma posed by the Brexit vote. 

Scotland voted to remain in the European Union (EU) by 62 per cent on the 23 June, yet is facing the prospect of being taken out of the EU with the rest of the UK, which has already seen a negative effect economically.

On the committee website, committee convener Joan McAlpine MSP said: "We want to know what leaving the EU means to people in Scotland, particularly people in business. 

"We will hear from representatives of key sectors in the Scottish economy about the impact that the Brexit vote has already had on them and what they consider to be the major implications for Scotland in the future."

"If, as predicted, there is a further round of austerity, infrastructure investment may fall." Fraser of Allander Institute 

She continued: "We know already from speaking to the British Chamber of Commerce in Brussels that access to the single market is of paramount importance to most companies. 

"We experienced a lot of goodwill and understanding of Scotland’s situation when we visited Brussels. 

"No country has left the EU before and the process for leaving is far from straightforward, so it’s important that our committee provides a forum for people in Scotland to get involved in this difficult process." 

The committee meeting also comes after a speech earlier this week given by First Minister Nicola Sturgeon, who, at the Institute for Public Policy Research (IPPR) in Edinburgh, set out her five areas of “Scottish interests” that Brexit negotiations could not ignore.

This week, the IHS Markit's Purchasing Managers' Index (PMI), said the UK decision to leave the EU had already led to a "dramatic deterioration" in economic activity, not seen since the aftermath of the 2009 financial crisis.

"The UK economy could contract by 0.4 per cent in the third quarter of this year." Chris Williamson

Manufacturing and service sectors across the UK have seen a decline in output and industry orders. Chris Williamson, chief economist at IHS Markit, told the BBC that the downturn had been "most commonly attributed in one way or another to 'Brexit'".

He added in the IHS report that the UK economy could contract by 0.4 per cent in the third quarter of this year, but that would depend on whether the current slump continued.

"We experienced a lot of goodwill and understanding of Scotland’s situation when we visited Brussels." Joan McAlpine

Fraser of Allander Institute, an independent economic think tank based in Glasgow, said in a post Brexit economic paper this month: On investment – over time, investment is likely to be lower as a result of inevitably higher long-term interest rates, lower inward investment and slower economic growth and, of course, the substantive increase in political and economic uncertainty surrounding the UK.  

"Access to the European Regional Development Fund, European Social Fund and European Investment Bank is threatened, with no plans as yet for what will take their place. 

"If as predicted, there is a further round of austerity – infrastructure investment may fall."

Those giving evidence on Thursday will also included Edinburgh Airport, the Federation of Small Business, and representatives from farming and fishing. 

CommonSpace will be covering the event on Thursday. Keep up to date with us on Facebook and Twitter.

Picture courtesy Paula Funnell

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