Scotland business

Brexit: Scottish economy 'yet to feel full impact'

Containers at port Image copyright Getty Images
Image caption The UK government is embarking on trade talks with the EU

Much of the impact of Brexit has yet to be felt on the Scottish economy, according to a report by the government's chief economist.

Gary Gillespie forecast "all forms of EU exit" would lead to lower household incomes than continued EU membership.

He argued the Scottish economy would be £1,600 per head worse off by 2030 if the UK government strikes a free trade deal with Europe.

If no deal is reached, that would rise to a £2,300 shortfall.

A free trade agreement is the preferred outcome of the UK government.

The report also argued that the Scottish economy had been dominated by Brexit uncertainty in recent years, contributing to growth being "significantly below trend".

It said the UK's departure from the EU had hit businesses and affected economic growth.

Sluggish growth

According to Mr Gillespie's report, growth is expected to continue to be sluggish over this year as the future relationship with the EU remains undecided.

Following the announcement of the draft Budget at Holyrood last week, the Scottish Fiscal Commission forecast 1% growth in 2020 and 1.1% growth in 2021.

Growth in 2019 had been forecast at 1.2%, but the economy actually grew by 0.9%.

The report said: "The official and independent forecasts for the Scottish economy suggest growth of around 1% in 2020, rising slightly over the next few years, which is broadly in line with recent annual growth in productivity.

"As noted, this may be stronger than 2019 but is likely to remain below trend as the economy transitions to whatever new trade arrangements materialise for 2021 and beyond."

More on this story