Labour-Tory customs union deal would cost Scotland £5.9 billion
Brexit: Labour-Tory customs deal would cost Scotland £5.9 billion
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Theresa May and Jeremy Corbyn are cooking up a dodgy Brexit compromise
ONE of Scotland's leading think tanks has calculated that the possible customs union Brexit being negotiated between Prime Minister Theresa May and opposition leader Jeremy Corbyn could cost Scotland £5.9 billion and 47,000 jobs.
Business For Scotland (BFS) carried out the detailed analysis of the effects of the customs union deal and has concluded that the planned arrangement would be devastating for the Scottish economy.
"We have come to the conclusion that it will cost 47,000 jobs and damage our most important export sectors," said BFS founder and National columnist Gordon McIntyre-Kemp.
He listed 10 effects of the May-Corbyn customs unions deal: "Eastern Scotland will be the most adversely affected region in the UK by a customs union deal – by 2029 the region will have lost 3.7% of GDP. This is 1% higher than in outer London."
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According to the report, a customs union deal will have cost Scotland £5.9bn by 2029.
It said Scotland's unemployment rate would increase by about 1.3%, which as a percentage of the country's working age population in 2018 is equivalent to 47,000 jobs.
The cost of non-tariff barriers, such as regulations, rules of origin and quotas, will outweigh the benefits of being in a customs union:costing the UK 5.1 per cent of GDP in the long run, the analysis said.
A customs union without being a part of the single market will increase border friction and the costs of trade, BFS reported, adding that such a deal will reduce investment by around 18% UK-wide compared with staying in the EU.
Scotland can expect to suffer more than most of the UK countries since it receives the second-most in Foreign Direct Investment projects.
A customs union exacerbates demographic challenges too, the report said. No post-Brexit EU immigration would mean a 3% fall in Scotland's working age population by 2041 and a 7% decline in the number of children.
Scotland will receive more than £5.3bn in EU funding between 2014-2020. But Scotland could lose the next round of funding with no guaranteed replacement by the UK Government.
BFS also said that a customs union deal means UK average real wages would suffer a long-term fall of 6%.
As part of the customs union, the UK will be obliged to follow EU rule changes while not having a vote on those changes or lose the benefits of a customs union.
McIntyre-Kemp stated: "Our research team at Business for Scotland has been wading through the available data to build a picture of the economic damage and trading policy restrictions that a customs union Brexit would bring to Scotland.
"With the caveat that until we know the exact detail of any customs union agreement we can only estimate the economic impact using the available data, but even using conservative estimates a customs union would be deeply damaging for Scotland's economy."
He added: "A customs union on its own can't really work, you need regulatory alignment or you need customs checks, country of origin paperwork and lots more customs staff.
"In other words, you only have free movement of goods if regulations, standards such as veterinary practices, safety and contamination are all aligned.
"Otherwise, the checks and tests slow the movement of goods down to pretty much the same as a no deal Brexit. So what's the point?"
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