Leaving the European Union poses a “really worrying threat” to the Scottish economy, according to a leading academic.
Brian Ashcroft, the emeritus professor of economics at Strathclyde University, said that a vote for Brexit would badly hamper trade between Scotland and Europe and was likely to drastically reduce inward investment.
On trade, he cited London School of Economics research indicating that the UK would have a period of at least two years of new tariff barriers on goods before it could renegotiate a better deal.
Mr Ashcroft also pointed to significant non-tariff barriers — including differing regulations and language problems — that the EU was making progress to reduce.
“We will be outside that process,” he said. “There will clearly be non-tariff barriers erected against the UK and rest of the EU.”
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Mr Ashcroft was speaking as the Fraser of Allander Institute downgraded its growth forecasts for Scotland. He warned that it was “highly probable” that Scotland would not get the same degree of inward investment should the UK vote to leave the 28-nation bloc. “And I might add Scotland is usually top of the list in terms of the extent we attract inward investment.” he said.
“A lot of that inward investment might not be here if we are outside the EU as a lot of it is selling to the wider EU market.
“This is a really worrying threat for Scotland. From a strictly economic point of view, which has nothing to do with sovereignty or all these bigger issues about security, we are very concerned that the Scottish economy would be affected by this.”
Paul Brewer, a partner at PwC in Scotland, which supports the Fraser of Allander, said uncertainty around Brexit was a “significant” consideration for businesses that were considering large investments.
“It is weighing quite heavily on business decision-making,” he added.
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Mr Brewer said the prospect of further public sector cuts in the budget and the forthcoming Holyrood elections were also playing a part in the timing of investment decisions.
The Fraser of Allander yesterday predicted a further slowing in economic growth in Scotland partly as a result of low oil prices.
It kept its 2015 figure the same, with growth to 1.9 per cent expected. However, the forecast for 2016 was reduced from 2.2 per cent growth to 1.9 per cent and 2017 was scaled down from 2.5 per cent to 2.2 per cent.
The think tank warned that growth remained unbalanced and was mainly being fuelled by household spending. It also voiced concerns over the growing levels of household debt.
The Fraser of Allander called for George Osborne not to pursue further austerity measures at the budget.
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Mr Ashcroft said: “ It is difficult, we believe, to argue for further austerity. The UK is the only country in deficit which is planning to have a surplus by 2020. It just seems to fly in the face of economic reason.”