INDEPENDENCE would “leave Scotland considerably poorer,” hitting its economy up to three times harder than Brexit and leaving Scots as much as £2,800 a year worse off, according to new research.

Analysis by the London School of Economics’ Centre for Economic Performance says a post-Brexit independent Scotland would, over the long term, see its economy shrink by 6.3% in an optimistic scenario and by 8.7% in a pessimistic one.

However, it points out both of these calculations are likely to be underestimates as there could also be impacts on trade productivity.

And the research also suggests rejoining the European Union would not offset the costs to Scotland of independence.

The study, “Disunited Kingdom? Brexit, Trade and Scottish Independence,” points out how leaving the UK would mean the creation of a costly international border, involving customs checks, with trade costs in an optimistic scenario rising by 15% and in a pessimistic one by as much as 30%.

It concludes independence would hit the Scottish economy harder than Brexit because Scotland’s trade with the rest of the UK is around four times larger than its trade with the EU.

The analysis also points out there is around six times more trade between Scotland and the rest of the UK than predicted by the standard gravity model of international trade, highlighting the trade benefits from being part of a United Kingdom.

One of its three authors, Hanwei Huang, Assistant Professor at the City University of Hong Kong, said: “This analysis shows, at least from a trade perspective, independence would leave Scotland considerably poorer than staying in the United Kingdom.

“While many considerations will play a role in shaping the outcome of a second referendum, voters need to know what the likely costs and benefits of each course will be. This briefing contributes to that knowledge.”

Thomas Sampson, Associate Professor of Economics at the LSE, noted: “The costs of independence to the Scottish economy are likely to be two to three times greater than the costs of Brexit.

“Moreover, rejoining the EU following independence would do little to mitigate these costs and, in the short run, would probably lead to greater economic losses than maintaining a common economic market with the rest of the UK.”

His co-author Patrick Schneider, a PhD student at LSE, added: “We show rejoining the EU will only support the Scottish economy in the long-run if a costly condition is met; that the move to independence reduces trade with the rest of the UK by so much the EU becomes Scotland’s largest trading partner.”

The researchers analyse the impact on Scotland’s economy of potential changes to trade barriers resulting from Brexit and Scottish independence and calculate their combined economic hit would leave Scottish incomes between £2,000 and £2,800 per capita per year worse off.

They say their estimates reflect the long-term effects of Brexit and independence, noting how it could take a generation or more for the full consequences to materialise; in the meantime, the rest of the UK would remain Scotland’s biggest trade partner.

The report concludes: “A complete account of the economics of independence should also consider changes in technology, foreign investment, immigration, currency arrangements and fiscal transfers as well as studying the distributional consequences of independence. But our analysis shows that, at least from a trade perspective, independence would leave Scotland considerably poorer than staying in the United Kingdom.”

Responding to the analysis, Fiona Hyslop, the Scottish Government’s Economy Secretary, said: “As an independent member of the EU, free from the damage of Brexit, Scotland would be part of the huge single market, which is seven times the size of the UK.”

She argued there was “no reason whatsoever” why Scotland could not emulate the success of similar-sized independent countries, which were far wealthier per head than the UK, noting how Norway’s GDP was nearly 40% higher than the UK’s.

Ms Hyslop pointed out the study had not taken account of any changes in migration policy, inward investment or the economic levers the Government of an independent Scotland would have control of to boost the economy.

“With our economic resources and advantages, control of economic policy and membership of the EU Scotland would be very well placed to grow the economy.”

Maurice Golden for the Scottish Conservatives said the LSE report underlined the risks of the SNP’s desire to have a second independence referendum this year.

“The Scottish Conservatives won’t gamble our economy and jobs, unlike the SNP. Our focus is on the recovery and rebuilding our country after the pandemic,” declared the party’s economy spokesman.

Noting how the Treasury had already given £19 billion to help Scotland cope with the pandemic, the MSP added: “Scotland in the United Kingdom is vital to our economic recovery.”

Scottish Labour’s Anas Sarwar insisted the analysis confirmed the SNP’s plan for an independent Scotland would lead to deeper austerity, which was why his party opposed it.

“The difficult years ahead of us must be about economic recovery, not inflicting further economic pain on our communities and people who are already struggling,” declared Scottish Labour’s constitution spokesman and candidate to be its next leader.

“Rather than return to the old politics of division, the next parliament must be a Covid Recovery Parliament that focuses on bringing people together,” he added.

Pamela Nash, Chief Executive of Scotland in Union, described the report as “devastating” and claimed it exposed the economic damage the SNP wanted to inflict on people with its negative vision for Scotland’s future.

“Leaving the UK would take money away from vital public services like the NHS and schools for the sake of a border with England,” declared the former Labour MP.

“That would be unforgiveable at any time, let alone in the difficult years ahead as we recover from the pandemic.”