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The Scottish Government’s latest economic report reveals a no deal Brexit would have “significant impact on economic activity” in Scotland. The fears are now being raised less than six months before the end of the Brexit transition period when the UK will no longer have to follow EU rules.
The Scottish Government has repeatedly called for the transition period to be extended with First Minister Nicola Sturgeon writing to Boris Johnson warning that “fundamental issues” still remained between the UK and EU negotiators.
Scottish Government sources told Express.co.uk that the economy north of the border was in “jeopardy” stressing it was a “delicate time” especially after a “deadlock in recent negotiations”.
They added there was “severe concern” especially at the six month mark adding the coronavirus pandemic had already “left businesses in a vulnerable state” stressing that no deal and no extension to the transition period would make things “significantly worse”.
The monthly economic report added: “As we also move towards formally exiting the EU transition period (31 December 2020) uncertainty regarding future trade arrangements with key markets has the potential to impact already weakened business sectors and have a significant impact on economic activity, particularly if there is no deal.”
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Dr Liz Cameron, chief executive of the Scottish Chambers of Commerce, told Express.co.uk that many businesses still lack clarity as to what the future holds.
Dr Cameron stressed that Scottish businesses required “detailed answers” on a wide number of issues if “they are able to plan properly for the changes that will come when the transition period comes to an end”.
She concluded: “Our Scottish Chamber Network continues to call upon the UK Government to prioritise flow across the border, not adding costs or bureaucracy to businesses who are already dealing with major trading challenges due to the coronavirus crisis.
“Whatever deal is done, Scottish businesses must be able to compete effectively.
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“The Scottish Chamber of Commerce is actively involved in talks involving trade with new markets.”
The report also revealed Scotland’s GDP fell by 2.5 percent in the first quarter of 2020 which was “mainly driven by a 5.0 percent fall in output in March as the spread of coronavirus and introduction of lockdowns slowed economic activity.”
It continued: “COVID-19 has resulted in an economic crisis in Scotland, through the direct impact on the economy but also the secondary impacts on health and society from a weaker economy.
“The impact of COVID-19 is not constant, and will be changing over time, depending on the prevalence of the virus and the severity of the restrictions required to protect against it.”
Scotland has already felt the impact of the pandemic after figures showed GDP fell 18.9 percent in April, the first full month of lockdown, and around 23 percent over March and April combined.
However, figures for the month of May are due to be published by the Scottish Government next week.
Scottish Finance Secretary Kate Forbes has already spurred into action and asked the Treasury to give Holyrood extra tax powers or £500m in further funding.
She warned there was a £500million hole between the extra cost of the COVID-19 pandemic and the funding given to Scotland from Westminster.
Chancellor Rishi Sunak gave £800m to Scotland through his Summer Mini-Budget however but the MSP dismissed this stressing it didn’t meet Scotland’s needs specifically.
Ms Sturgeon wrote in her letter to Boris Johnson: “No-one could reproach the UK Government for changing its position in the light of the wholly unforeseeable Covid-19 crisis, particularly as the EU has made it clear it is open to an extension request.
“We therefore call on you to take the final opportunity the next few weeks provide to ask for an extension to the transition period in order to provide a breathing space to complete the negotiations, to implement the outcome, and the opportunity for our businesses to find their feet after the enormous disruption of recent months.
“At the time the Withdrawal Agreement was signed, no-one could have imagined the enormous economic dislocation which the Covid 19 pandemic has caused – in Wales, Scotland, the whole of the UK, in the EU and across the world.”
The letter claimed that, at best, there would only be a “bare bones” trade deal in place by December, or a move to a no-deal exit from the EU.
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