Brexit - Fraser of Allander Institute Blog

Scottish Exports: Growth in 2017 but target missed

Today the Scottish Government published Export Statistics Scotland, the key source of information on Scottish exports.

In light of the ongoing Brexit uncertainty and the potential risks to Scottish trade patterns, today’s publication offers some interesting insights into the different markets that Scotland sells to, the sectors that are doing well (and those less so) and Scotland’s export performance over the longer-term.

Headline numbers

International exports from Scotland rose by £1.9 billion – or 6.2% – between 2016 and 2017. Note that this is in nominal terms; in real terms the growth was just 0.5%.

Boosted by the competitive value of the pound and strong growth on the continent in 2017 – where the Euro Area economy grew at its fastest rate since 2007 – the improvement in Scottish exports was driven by a £1.7bn increase in exports to the EU. This was equivalent to a 13.3% rise between 2016 and 2017.

Scotland’s exports to the rest of the UK also increased in 2017, up £2.2 billion (4.6%).

The Scottish Government’s Economic Strategy had a target to grow Scottish international exports by 50% by 2017 (on a 2010 baseline). Despite today’s uplift, the figures confirm that this target has been missed, with international exports up by around 35% since 2010.Continue reading

The gains from economic integration: The EU has still a long way to go

David Comerford, Chancellor’s Fellow, Fraser of Allander Institute, Department of Economics, University of Strathclyde

Sevi Rodriguez Mora, Professor of Economics, University of Edinburgh; CEPR Research Fellow

First published on VoxEU.org at: https://voxeu.org/article/gains-economic-integration-eu

Summary

Populists in Europe are contesting the perceived benefits of economic integration between countries. This column uses data on trade frictions to estimate the long-run impact of trade frictions on GDP if countries in Europe were to be more or less integrated. Negative between-country impacts, such as from Brexit or an EU collapse, imply a GDP reduction of between 1-3%. The potential trade benefits of a ‘United States of Europe’, on the other hand, may be an order of magnitude greater for its members.

Scotland and the latest Brexit modelling scenarios – a negative outcome all round

Over the course of this week, the UK Government, the Scottish Government and the Bank of England all published new Brexit analysis.

We have been asked by a number of people to give our take on these numbers.

So in this blog, we attempt to summarise what each model is telling us and the implications for Scotland.

In short, the numbers don’t look great. Far from it.

Even under the UK Government’s favoured deal, the UK economy is expected to be smaller in the long run by around 4%.

But it is the Bank of England’s scenario of a disorderly ‘no deal’ Brexit that is the most eye-watering. Here the UK economy could shrink by 8% in a year – double the size of Scotland’s recession during the financial crisis. Unemployment could rise to 7.5%. If that was replicated in Scotland this would be equivalent to around an additional 100,000 people out of work.Continue reading

What might happen to Scotland’s economy in the event of ‘no deal’?

The prospects for ‘no deal’ to be agreed between the UK and the EU have increased in recent weeks.

A lot has been written about the potential long-term economic implications from Brexit. All else remaining equal, the larger the economic barriers between Scotland and its main international trading partner, the greater the potential hit to the country’s growth potential.

But very little has been written about what the implications might be in the short-run from ‘no deal’….beyond “bad” or “very bad”.

In this blog we try to unpick some of the key issues surrounding what a ‘no-deal’ might mean for the economy and just why it is so difficult to forecast.

Today’s Fraser of Allander Economic Commentary in 10 bullet points

Today we published our latest Economic Commentary.

Alongside our analysis of the Scottish, UK and global economies, we include the following articles:

Reappraising Scotland’s exports and their geographies: Brexit and beyond, Ronald V. Kalafsky (University of Tennessee) and Ross Brown (University of Strathclyde)
Monetary and fiscal policy in a newly independent Scotland: lessons from the dissolution of Czechoslovakia?, Frantisek Brocek (University of Strathclyde)
Highlighting the need for policy coordination: the economic impacts of UK trade-enhancing industrial policies and their spill-over effects on the energy system, Andrew Ross et al. (University of Strathclyde)

Today’s Commentary also includes an examination of the hot topic of regional inclusive growth.

In this blog, we summarise some of the key points from our latest outlook.