A NO-DEAL Brexit would cause a “major dislocation” to Scotland’s economy and could profoundly reshape it in the longer-term, the Government’s top economist has warned.
Dr Gary Gillespie, the chief economic adviser to SNP ministers, said a chaotic exit from Europe would hit logistics, supply chains, trade, investment and market confidence.
If the economic shock persisted, it would cause “significant structural change”, he said.
In his monthly State of the Economy report, Dr Gillespie laid out a range of data showing Scottish growth was relatively good in 2018, but there were also recent problems.
Business confidence had slumped, and warehouse stockpiling had soared, as firms took steps to protect themselves against a breakdown in supplies in the event of a no-deal.
Dr Gillespie also issued a new government study showing even Theresa May’s preferred Brexit plan would hurt the Scottish economy through more red tape and fewer EU workers.
It said the impact of non-tariff barriers and “migration shock” would be most keenly felt in the chemical and pharmaceutical sector, which could shrink by 10 per cent.
However the biggest impact on the economy overall would be a squeeze on the wholesale and retail sectors, professional and financial services.
Exporters of goods would be hit harder than the service sector.
In his monthly report, Dr Gillespie highlighted the continued uncertainty caused by the looming date for Brexit and the lack of a settled plan at Westminster.
He said: “Given the proximity to 29 March deadline, a no-deal Brexit remains a significant (and live) risk and would lead to a major dislocation to the Scottish economy.
“This would occur through a number of channels - disruptions to logistics, supply, trade, investment, migration and market confidence.
“Any shock is likely to have disproportionate sectoral, as well as, regional impacts and if prolonged, will lead to significant structural change in the economy.”
SNP finance and economy secretary Derek Mackay said it showed the need for the UK government to rule out a no-deal Brexit.
He said: “Scotland’s economy continues to perform well with further growth and record low unemployment. But we cannot ignore the fact that this is being put at risk by the increasing uncertainty associated with Brexit, and in particular the risk of a no-deal scenario.
“Brexit, in whatever form, will cost jobs, make people poorer, damage our society and undermine the democratic decision of the people of Scotland to remain in the EU.
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Scottish LibDem leader Willie Rennie said: “he Scottish economy is fragile, with low growth and businesses and consumers worried about the future.
“Conservative neglect and Labour compliance has taken us to the brink of a no deal Brexit which would devastate the Scottish economy.
“It’s clearer than ever that we need a People’s Vote and an exit from Brexit.”
Scottish Labour leader Richard Leonard added: “This report shows the urgent need for Theresa May to take the threat of a no deal Brexit off the table - but also that our economy needs fundamental change.
“Labour will put power, wealth and opportunity back into the hands of people by boosting their wages and giving them more control in our economy."
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