How might Scottish independence affect the costs of international trade?

Primary Author or Creator:
Thomas Sampson
Economics Observatory
Alternative Published Date
Type of Resource:
Fast Facts

"There is considerable uncertainty over how substantial the economic effects of introducing a border with the rest of the UK would be."

More details

"A good rule of thumb is that borders are less costly when they affect less trade. This suggests that as long as the rest of the UK remains Scotland’s most important trade partner, Scotland would be better off prioritising integration with the rest of the UK, which means staying outside the EU.

Research that accounts for expected changes in trade patterns following independence concludes that rejoining the EU would not offset Scotland’s economic losses from increased border costs with the rest of the UK. Estimated declines in Scottish income per capita, due to changes in trade following independence, are similar regardless of whether or not Scotland rejoins the EU (Huang et al, 2021).

Another recent publication also shows that Scottish independence is likely to reduce output and trade with the rest of the UK through increased border costs (Figus et al, 2022). But, in contrast to the study mentioned above, this analysis considers a scenario where rejoining the EU does not increase border costs with the rest of the UK more than staying outside the EU does. Consequently, it finds that rejoining the EU may partially reverse the economic effects of increased trade costs with the rest of the UK.

At least from a trade perspective, EU membership would not be a panacea for the economic challenges that independence would create by increasing border costs with the rest of the UK, Scotland’s largest market."