Glancing through the Scottish Government’s latest analysis of the impact of Brexit on Scotland (Scotland’s Place in Europe: People, Jobs and Investment) it’s difficult to believe that this has been produced by supposedly impartial civil servants.
The language is highly misleading, the calculations questionable and the assumptions make Mr Fantastic from the Fantastic 4 look as stretchy as me when I’m tying my shoelaces. Luckily it’s so implausible that it’ll do the nationalist cause more harm than good given their track record on these kinds of economic forecasts.
First, a sense check. roughly 6% of the Scottish economy is involved with EU trade. But the headlines from this report give the total cost of Brexit at 8.5% – more than the total amount of trade with Europe! That’s clearly impossible. Hmm, so where does this come from?
Well, a favourite nationalist trick is to muddy the waters between annual effect and total effect. Take the recent Fraser of Allander analysis of a WTO Brexit, which suggested that 80,000 jobs could be at stake. This was after ten years – i.e. roughly 8,000 jobs a year (less than half of one percent of Scottish workers). Yet the nationalists routinely quote the 80,000 figures is if it’s every year, and some of the media fall for this.
They’ve performed the same trick here. The 8.5% cost is actually by 2030 – but the paper actually seems to roll this up and presents an annual cash figure – £2,300 per person. That’s just one example of the highly misleading language used in the paper and official press releases.
On the numbers, we don’t know how the authors calculate their figures because there are no workings or other details in the document. However it’s easy to have suspicions when the main document seems to claim that Scotland is a net recipient of EU funds (chart 5) when in fact the opposite is the case (as is admitted in the appendix).
However the numbers were crunched, it’s clear that some pretty stretchy assumptions were added into the mix. Most of the projected economic loss appears to come from lower migration and lower productivity stemming from lower inward investment. How these factors will pan out in practice is anyone’s guess (see last blog below, for example). Apart form anything else, if the population falls, then why does the paper divide the total cost by the current population to produce their whopping £2,300 annual cost?
Meanwhile there’s no mention that the UK might be able to reduce trade barriers with that half of the world that is not in the EU. Rather, it seems that the authors have taken a series of woefully pessimistic assumptions, ignored the other half of the ledger, and asked a model to produce some results. Mirror, mirror on the wall.
It’s true that most economists predict some costs from Brexit, at least in the short term, though these will be felt less in Scotland than the rest of the UK. One would not expect SNP ministers to commission and publish a report that said otherwise. But to pretend that we’re all going to lose 10% of our income overnight from Brexit is absurd.
Tom Miers 