Independence would hit Scottish trade harder than Brexit: LSE report

The Scottish government said an independent Scotland would benefit from rejoining the European Union's single market. PHOTO: AFP

LONDON (REUTERS) - Scotland's economy will suffer a blow to trade two or three times more severe than the impact of Brexit if it breaks away from the United Kingdom, according to an academic study published on Wednesday (Feb 3).

Scotland's devolved government dismissed the report by the London School of Economics (LSE), saying it had not taken into account factors that would enable an independent Scotland to "do things better." The report said Scotland sends 61 per cent of its exports to the rest of the United Kingdom, which it said would remain its biggest trade partner for decades after any independence vote, limiting the benefits for Scotland if it rejoins the European Union.

"At least from a trade perspective, independence would leave Scotland considerably poorer than staying in the United Kingdom," said Hanwei Huang, assistant professor at the City University of Hong Kong, one of the authors of the report.

The pro-independence Scottish National Party, which heads the Scottish government, wants to hold a second referendum on breaking away from the United Kingdom.

Voters in Scotland, which has a population of around 5.5 million, rejected independence in 2014. But the SNP says Britain's departure from the EU, which was opposed by a majority of Scots, means the question must be put to a new vote.

Responding to the LSE report, the Scottish government said an independent Scotland would benefit from rejoining the EU's single market and pointed to the success of small EU member states Ireland and Denmark.

The Scottish government also said the study did not look at 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".

Opinion polls have shown a majority of Scots now favour independence, but British Prime Minister Boris Johnson has said he will not approve a new referendum.

The LSE report said Scottish income per capita stands to fall by 2 per cent because of Brexit.

If Scotland became independent, rejoined the EU and had low border costs for trade with the United Kingdom, that figure would become a 6.3 per cent fall - or a 7.6 per cent drop if border costs with the UK such as customs checks were high, it said.

The report estimated trade flows between Scotland and the rest of the UK were six times higher than would be expected if they were separate countries.

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