Brexit damage to the economy may lend weight to the idea Scotland is too poor for independence- letter from Scotland August 23

The annual Government Expenditure and Revenue Scotland (GERS) figures on Scotland’s economy came out this week – and they were seized on as a political tool to defend the Unionist cause. These show the amount public bodies spend in Scotland and the amount raised in taxes – the graph shows the biggest-ever gap. This is partly due to Covid.

But the widening gulf in relative prosperity between the south of England and Scotland is being worsened by Brexit. This Brexit deficit is happening to Scotland because. although it voted against Brexit by a wide margin, it is part of a UK which is now forcing its policies on an unwilling partner.

Brexit was already hurting Scotland’s economy in 2020/21 and the damage is likely to be worse in the current financial year. The UK Government may see policies that impoverish Scotland as politically expedient

The powers of the Scottish government are tiny compared to the power of the UK Government. The UKG is now repatriating powers to itself post Brexit without consultation with the Scottish Government – eg, funds that used to be dispersed from the EU via the Scottish Government – so that disparity is becoming greater. The Scottish Government cannot mitigate the effects of Brexit on the Scottish economy.

But far from being deterred, the UK Government may perceive policies that impoverish Scotland as politically expedient, if they succeed in weakening support for independence. Arguments that Scotland is too poor to risk independence will be strengthened.

The Brexit “benefit” will enrich the rich, mainly in the south of England, and punish the poor

The Brexit benefit, such as it is, will come through creating a low-regulation laundry for dirty money in the city of London, being open all hours to global kleptocrats and robber barons (with seats in the House of ‘Lords’ available to them at a price), permitting development however poorly constructed, reducing workers’ rights and environmental protections – while paying lip service to the latter. That benefit will accrue in tax receipts gathered primarily in the south of England.

One immediately obvious way that the poor will suffer is through an increase in the price of all kinds of food, particularly fresh produce. There are a lot of extra costs coming through because of import paperwork, the loss of EU lorry drivers, and EU labour in meat processing factories.

The UK’s much-vaunted trade deals with countries like Australia won’t bring in cheap fresh produce from other places because there isn’t really any to be had from elsewhere, in this climate-challenged world.

Brexit will further enrich the rich and punish the poor – England is already one of the most unequal societies in the world, a state of affairs that seems to be acceptable to most of its inhabitants, who continue to support Johnson and his crew. The main UK opposition leader, the Labour Party’s Keir Starmer seems honest but is derided by the English media for being short on the easy, imbecilic slogans which win elections there – things like “levelling up” an idea which isn’t backed by a coherent programme.

When there are issues with food distribution – the south of England gets first pick

Scotland is at a further distance from the sources of fresh food imported from the EU, most of which comes by lorry from the EU via Kent. More gaps are already evident in its shops than down south (I am basing that on reports from Scottish food importers, my own observations and on Twitter photos of empty shelves in supermarkets which very rarely feature the south of England). When food arrives in London the south of England gets first pick, Moving produce to Scotland takes longer, it requires more lorry drivers and smaller vans and they just don’t get the best when there is not enough to go around.

The UK Government has further shown its disdain for these problems by rejecting an appeal to Business Secretary Kwasi Karteng from the haulage industry for temporary visas for EU lorry drivers – the FT’s report today quotes the UK Government: “The British people repeatedly voted to end free movement and take back control of our immigration system”. There is no consideration for Scotland’s specific circumstances or different vote.

Scotland’s tourism industry is heavily reliant on seasonal workers from the EU

Scotland relies disproportionately on seasonal businesses like tourism, in fragile rural areas with a small population. Many of these businesses were supported by the work of EU nationals who came over for a few months in the summer and lived on site. If you drive through the Highlands right now in high season you will see many help wanted signs. You will also come across many restaurants that are shut more than usual – at lunchtimes say, or an extra day a week because they can’t get the staff. That impacts Scotland’s GDP.

It is possible that the UK Government would hope that to the extent seasonal EU workers are being replaced by young people coming up from England, that may again decrease support for independence. EU nationals are likely to have a vote in any Scottish referendum and are more likely to vote for an independent Scotland that is looking to rejoin the EU.

Scotland’s agricultural sector can’t compete against bigger farms down south for a limited supply of migrant workers

Scotland’s agricultural sector is also suffering disproportionately. It has smaller farms on average and they can’t win the battle for the 30,000 migrant labour workers the UK government is allowing into the UK (down from 90,000 in a normal year before Brexit). I interviewed a fruit farmer recently, Iain Brown, an NFU Scotland rep, who told me he was having to leave 10% of his crop to rot – and that is about the average in his sector. He and his colleagues are paying much more in labour costs, but they are currently being forced by supermarkets to absorb that cost.

In the long run, food prices will go up. The European Common Agricultural Policy was conceived in the aftermath of the second world war to support small farmers and provide food security. It does both. Poor people in the US or Australia don’t buy fresh fruit and veg – they can’t afford it. People in Europe aren’t expected to pay the cost of producing the food they eat.

Rising food costs won’t impact Boris Johnson or anybody he knows. But this winter we will start to see them impact the shopping trolleys of the just-managing. The UK Government is also planning to remove the £20 a week uplift on universal credit.

Scotland’s exports to the EU are being hammered by Brexit

Scotland is the only part of the UK which exports more than it imports from the EU and its exports are being hammered. Recent figures showed that the whisky industry, which accounts for a fifth of the entire UK’s food and drink exports, is exporting £5 million a week less to the EU. Seafood and other food and drink exports such as seafood are also severely impacted – new figures show seafood export to the EU was down 27% in the first three months of 2021, a period covered by this week’s GERS numbers. Scotland was responsible for 75% of exports of seed potatoes to the EU – and with that valuable trade now closed off many businesses are in chaos, reports Farming UK.

Producers may be able over time to redirect some of these exports to the rest of the UK. The UK Government may again hope to reap a political dividend from the effects of Brexit, if Scotland’s exports to the rest of the UK rise, and those to the EU fall. This will be an attack point on the case for independence – they will argue that Scotland can’t afford to erect barriers with its main trading partner,

Scotland’s ability to attract EU students and to send students to the EU is damaged

Scotland historically has an international outlook and a strong tradition of sending the young abroad to study and work – but the door to free movement has been slammed. The number of EU students coming to Scotland’’s Universities has more halved in a year – down 56%.

It is much harder for EU staff to come to work at Scottish Universities now and their numbers are almost certainly down although figures don’t seem available. The UK gov replacement for the Erasmus scheme to encourage cross EU study, the Turing scheme, is much less well funded, restricted to a narrow range of institutions, only 4 out of 140 of them in Scotland, and it doesn’t cover tuition fees.

Scotland has a strong university sector that provides the spin-off companies and highly trained staff that drive a strong modern economy – losing the opportunity to work together easily with students and staff from the EU is likely to cause damage. Not to mention the Scottish Uni sector has lost access to EU funding which in the past provided a significant percentage of its research and development funding.

Brexit is just an example of an ongoing problem that has led to Scotland’s economy underperforming

Scotland is paying the price for a policy that was conceived, prosecuted and executed with little regard for her interests or requirements. This is an example of a problem that Scotland has faced for many years – policy set in London which is geared to the needs of the south of England has led to a situation where the Scottish economy underperforms against virtually every other EU country of a similar size.

The annual issue of the GERS figures is a feeding frenzy for Scotland’s largely Unionist media, most of which is owned and controlled in England. Journalists like the BBC’s Douglas Fraser choose not to put it in context.

GERS doesn’t say why so many decisions that affect Scotland are taken in England without regard for their effect north of the border. It doesn’t say why most of the people who run the businesses that Scots work for; or who hold the power and the purse-strings live and work and pay their taxes in the south of England.

The current UK government has little support in Scotland. For them, taking decisions that make Scotland poorer is without electoral consequence, other than offering a potential political dividend when it allows them to attack Scottish confidence.

Brexit illustrates the penalties of being part of a Union that doesn’t respect the democratic wishes of the smaller party.