Scottish independence would be 2-3 times more costly than Brexit, and rejoining the EU won’t make up the difference

Primary Author or Creator:
Hanwei Huang
Additional Author(s) / Creators
Thomas Sampson, Patrick Schneider
Date Published:
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Length (Pages, words, minutes etc...)
Fast Facts

Scottish independence would be 2-3 times more costly than Brexit over 15 years. Rejoining the EU wwll make up part of the difference in trade value.  This made headline news for a time.  The methodology for this prediction has been questioned.

More details

The combination of independence and Brexit would reduce income per capita by at least 6 per cent; the impact of independence is 2-3 times greater than that of Brexit. Independence would impose a new border between Scotland and the rest of the UK. Various academic studies have estimated the effects of borders on trade. Although there is no consensus on the exact number, borders are usually estimated to have large negative effects.

Based on this literature we analyse an optimistic low-cost scenario where independence increases trade costs with the rest of the UK by 15 per cent, and a pessimistic high-cost scenario, with a 30 per cent increase. To estimate the effect of these increased costs, we use an updated version of the Centre for Economic Performance model of trade. This takes into account the links between four regions (Scotland, the rest of the UK, the EU, and remaining countries) and the structure of each of their economies (27 industries and their links to each other). The model estimates how changes in trade costs affect trade and how this impacts income in various scenarios – Brexit, then Brexit plus independence, then Brexit plus independence and rejoining the EU. In each case, we analyse both the high and low border cost scenarios.

In a nutshell, the rest of the UK is currently a much more important trade partner than all other countries combined. As a result, the trade costs imposed by independence will cause a substantial reduction in Scottish trade and income.