Smooth Brexit ‘vital’ for growing Scots economy

Securing a smooth Brexit transition is “vital” to protect Scotland’s growing economy – even if that means extending the Article 50 negotiation period – according to the latest report from the Fraser of Allander Institute.

In its latest Economic Commentary, the institute says Scottish GDP grew by 0.5% in the second quarter of 2018.

This is in line with its prediction of a more optimistic outlook for 2018 and is the second quarter in a row Scotland has outpaced UK growth.

The report says that recent Scottish growth has been relatively broad based with a particularly strong performance in manufacturing, which has been boosted by Scotland’s food and drink industry and tourist-related activities.

The oil and gas sector has also recovered steadily with Brent crude now trading at around $80 a barrel, much higher than the $30 per barrel seen in 2016.

The institute predicts Scottish GDP will grow by 1.3% this year and 1.4% in 2019, although the economists also highlight the high degree of uncertainty surrounding the forecast at the current time.

Despite these positive figures, the institute emphasised the continuing fragility of the Scottish economy and stressed the importance to the UK economy of securing an orderly transition if it leaves the EU in March 2019 to avoid potentially damaging disruption to business.

Professor Graeme Roy, director of the Fraser of Allander Institute, said: “Whether you agree or disagree with the decision to leave the EU – and irrespective of the nature of the final settlement – it is essential that we have an orderly transition.

“To enable firms to prepare and develop contingency plans it is vital that a deal is reached.

“Should this require more time to negotiate a workable solution then so be it.

“Extending the Article 50 negotiation period – but maintaining the same transition  timescale to 2020 – may be unpalatable for some but could be essential to protect jobs and livelihoods.”