BRITAIN’S departure from the EU’s economic and customs union shows there would be a negative impact if Scotland left the United Kingdom with a predicted annual loss of £10 billion, a leading Scottish economist has suggested.

Professor John McLaren for the Scottish Trends website said: “The Brexit-related arguments that the break-up of an economic and customs union will result in a negative impact on future economic growth - due to increased tariff and non-tariff barriers - are also valid in the case of Scottish independence from the UK economic union.

“However, the degree to which this impact might be greater or lesser than for Brexit remains a matter for debate,” he explained.


Prof McLaren said it was “widely accepted that Scotland would be deprived of a net transfer, in the region of £10 billion, from the rest of the UK in the event of independence”.

This, he argued, was in contrast to the UK leaving the EU, where the impact was likely to be “small but positive,” although this would be negative once longer term, slower growth impacts were considered.

Prof McLaren, former UK Treasury economist, who lectures on public policy at Glasgow University’s Business School, also suggested that the Brexit debate showed that if Scotland voted to become independent, then this was likely to lead to a “plethora of options” for what independence might actually mean.

He explained: “This ranges from an old-style nation-state to remaining in some form of political and economic union with both the EU and the UK.

“A bespoke arrangement with both bodies seems likely to result in the most advantageous - or least detrimental - outcome in economic terms.”

This, Prof McLaren, argued this might involve an independent Scotland having membership of the European Economic Area similar to Norway or being part of a British economic union, similar in form to the current EU in terms of being an area of shared political sovereignty and economic co-operation amongst its member nation states.

“Such a ‘British Union' might allow for the use of sterling, no trade barriers and some degree of continuing fiscal transfer,” he suggested.

The academic said that while, as with Brexit, the first economic impact of such changes to the political and economic landscape around a second referendum might have little influence on the electorate, the second fiscal impact was more likely to affect, negatively, voting intentions.

This, he suggested, in turn might make it more likely that an “alternative form of independence” was proposed which helped ameliorate some of these impacts.

Prof McLaren said: “The UK Parliament’s Brexit discussions have provided a useful insight into how the next Scottish referendum may pan out.

“The range of possible Brexit outcomes highlights how independence is not an agreed, single, end-point but will inevitably involve a prolonged process of negotiations with both the EU and the UK.

“This leads to a much more complicated landscape for future arrangements than was perceived at the time of the first independence referendum.”

He added: “The acknowledged loss of a net transfer of public funds from the UK to Scotland may also lead to greater latitude with respect to what any future political and economic relationships may look like."

Willie Rennie, the leader of the Scottish Liberal Democrats, said: “This report should make clear to the Nationalists that independence would only worsen the economic chaos of Brexit.

“Straight away, independence would mean almost £10bn per year less for public services. A lower rate of economic growth will further eat away at cash for the NHS and education.

“Rather than stomp their feet, the SNP should face the facts: breaking up is hard to do,” he added.