IT seems that, in the end, many of the UK electorate were not interested in hearing about the clear economic dangers of exiting the European Union or were, however bizarrely, reassured by the Leave camp’s meaningless cheerleading about Mighty Blighty.
We will now be seeing these economic risks crystallise in coming months and years. You would imagine, at that point, they might attract greater interest from the electorate.
Businesses in Scotland appeared all along to have been more acutely aware of the economic damage that is now likely to occur than their counterparts elsewhere in the UK.
Polls by the Federation of Small Businesses, Scottish Chambers of Commerce, Institute of Directors, and the Scottish Council for Development and Industry showed huge support among businesses north of the Border for remaining in the EU.
That said, many firms across the UK, and notably also those from overseas with operations in Britain, realised the dangers and campaigned well.
Scottish voters, like business leaders north of the Border, seem to grasp the economic dangers of Brexit more firmly than those in many other places, perhaps because their nation has always been an outward-facing economy heavily dependent on international trade.
Through the votes of those elsewhere, the crucial international dimension of Scotland’s economy is now under extreme threat, so it is no surprise First Minister Nicola Sturgeon has said another independence referendum is “highly likely”.
One potentially positive outcome could be an independent Scotland within the EU, with a major competitive advantage over the rest of the UK, positioning itself as a gateway to free trade and the movement of labour. This could give it a real edge over the much-vaunted “northern powerhouse” in England, which would be hamstrung after Brexit.
Among the main threats to Scotland if all of the UK leaves the EU is the likelihood of a serious hit to overseas investment north of the Border, given many companies from outwith the EU that set up operations here do so mainly to get access to the huge free trade bloc.
Foreign direct investment in Scotland, which interestingly did not seem to stutter in any significant way during the 2014 independence referendum, would now seem likely to take a major hit in spite of the best efforts of the Scottish Government and its enterprise agencies.
The Leave vote would seem likely to affect not only new inward investment in Scotland but also raise the spectre of operations already here being moved to continuing EU member states. The Republic of Ireland would seem like an obvious alternative.
Inward investment in other parts of the UK would also seem likely to be hit.
Meanwhile, the huge support of Scottish businesses for remaining in the EU ahead of the referendum reflected, in very significant measure, the importance of trade agreements to export success.
The vote to leave the EU has thrown trade arrangements into total disarray. This will affect not only exports to EU member states such as France, Germany and the Netherlands that are among Scotland’s biggest export markets but also hit sales by Scottish companies to other countries. And then there is the importance of free movement of labour in terms of enabling businesses in Scotland, from engineers to software developers to those in the hospitality sector and construction industry, to secure the staff they need.
Financial markets, which have proved fallible over the years, may have got the result of the referendum spectacularly wrong.
That said, the massive challenges now facing the British economy as a whole were writ large in a plunge in sterling and the London stock market when the declarations came in.
We underestimate these challenges at our peril.
Many independent experts have laid out the likely huge hit to UK economic output from leaving the EU.
Only last week, the International Monetary Fund said UK gross domestic product could, by 2019, be 5.6 per cent lower in the event of Brexit than it would have been otherwise.
Regardless of the exact hit to growth, it is likely to be big and, crucially, it comes at a time when UK expansion is already very weak. Brian Ashcroft, emeritus professor of economics at Strathclyde University, last week highlighted the danger of a return to the bad old days of stagflation if the UK were to leave the EU.
He noted the weak pound would push up import prices, potentially giving rise to a nasty combination of rising inflation and slow growth. Mr Ashcroft warned last week that Brexit would put Scotland in a “very, very difficult position”.
We now find ourselves in this entirely miserable economic predicament at the worst possible time, with the Scottish economy already struggling amid savage austerity and the oil and gas sector’s woes.
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