Michael Dean: Brexit is both a problem and an opportunity

Economists are poised to revise down their forecasts for gross domestic product growth for this year. Picture: TSPL

Economists are poised to revise down their forecasts for gross domestic product growth for this year. Picture: TSPL

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BREXIT provides both a problem and an opportunity for Scotland, writes Michael Dean

As if last month’s shock referendum result wasn’t bad enough for most Scots – who wanted to stay in the EU – we are now seeing just how difficult and disruptive a task the Brexit is going to be.

Having taken the big step towards “regaining control” of the country, the Leave campaign leaders are finding that they cannot control what positions other sovereign states choose to take on the negotiations for the UK’s exit.

We face a short two-year time period to reach an agreement on exit terms.

Any extension to that is subject to the potential veto of one of 27 states; once 
time runs out without consent to an extension, the UK exits and EU law ceases to apply.

Consider the pressure building up to compromise as that dates approaches! As time slips away, businesses and individuals face an alarming lack of clarity as to the context they will soon find themselves having to work in.

Only a couple of weeks ago, many of us were bemoaning the lack of detail on what being outside the EU would look like. “What’s the plan?” we asked. Now it looks like the UK is actually going to do it, yet nobody appears to be any closer to answering the key questions.

Does business assume it will be inside or outside the single market? Will the regulatory regime for particular products or services change?

We will not know the detail until both an exit deal and a trade deal are concluded, but it would be good to know the parameters. Confusion reigns as to what some of the options might mean.

Ignorance of the EU in the wider populace is more than understandable – it is a complex beast. Ignorance among cabinet ministers seeking such significant change in our constitution and trade relationship is unforgivable.

Chris Grayling and others equate a free trade agreement with access to the single market. That is either totally ill-informed or misleading. Access to the single market brings with it free movement of workers, free movement of goods and services; freedom to move capital and establish businesses.

It involves agreement on, and adoption of, a common set of regulations. It is not just about tariffs, but also the many 
non-tariff barriers which are prohibited under EU rules. And it involves a contribution to the EU budget.

Meanwhile, confidence is shaken not only in markets but also in our system of government, as we plumb new depths as to the public’s willingness to trust the promises of politicians.

The chaos and credibility gulf at Westminster represents a superb opportunity for Nicola Sturgeon, politically and economically.

The First Minister has established a commission of experts to explore the legal and economic basis for Scotland to remain within the EU.

If, as an independent nation or otherwise, Scotland was able to be the part of this island which remains in the EU, it could provide the ideal springboard for expanded trade and inward investment: Scotland could provide the base on this island that allow the financial services sector access into the European markets.

That in itself could credibly replace North Sea oil as the basis of economic sustainability of an independent Scotland.

Many questions would have to be answered, and points negotiated, before that could happen and it presupposes a border between Scotland and England.

But assuming that one way or another the Scottish people can be granted their express wish of staying in the EU, our neighbours to the south would have handed those wishing independence a golden opportunity.

• Michael Dean is a partner and head of the EU competition and regulatory team at Maclay Murray & Spens LLP, a full service UK commercial law firm.

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