Report warns no-deal brexit could ‘shrink Scotland’s economy by 8%’

Demonstrators protest opposite the Houses of Parliament in London. Picture: AP Photo/Frank Augstein

The paper, drawn up to inform Cabinet of the likely implications of a no-deal Brexit, warned that many businesses are unprepared for withdrawal without an agreement, which would result in “reduced availability and choice of products” in shops and additional costs to companies.

It repeated official analysis suggesting no-deal could leave the UK economy 6.3 per cent-9 per cent smaller after 15 years than it would otherwise have been, with the worst-hit areas being Wales (-8.1 per cent), Scotland (-8.0 per cent), Northern Ireland (-9.1 per cent) and the North East (-10.5 per cent).

And it warned that the cumulative impact from no-deal is expected to be “more severe in Northern Ireland than in Great Britain, and to last for longer”.

Just over two-thirds of the Government’s most critical preparation projects - and fewer than 85 per cent overall - were “on track” for completion in time for the scheduled date of Brexit on March 29, it said.

Much of the information and analysis contained in the paper, released in response to an amendment tabled by Independent Group MPs Chuka Umunna and Anna Soubry, was already in the public domain.

But Mr Umunna said it painted “a disastrous picture of the catastrophe which would befall our country if there is a no-deal Brexit”.

The documents emerged 31 days ahead of the scheduled date of Brexit, and hours after Theresa May told MPs that they will be given a chance to vote on delaying EU withdrawal.

Mr Umunna said: “In light of what she knows, it is utterly irresponsible for the Prime Minister to keep a no-deal Brexit on the table given the extreme damage it will do.

“These papers set out how food prices will rise, we may see panic buying, there will be severe disruption at the border, and jobs and livelihoods would immediately be put at risk.

“Today she told the House of Commons she is listening, but MPs have passed a motion rejecting a no-deal Brexit and yet she refuses to request an extension of the Article 50 process in order to stop no-deal happening.”

The document said that delays and obstacles to cross-Channel trade as a result of no-deal “would not lead to an overall shortage of food in the UK”.

But it warned that 30 per cent of the UK’s food comes from continental Europe, and Britain is “particularly reliant” at that time of year on supplies of fresh fruit and vegetables via the Channel ports and Tunnel.

“In the absence of other action from Government, some food prices are likely to increase, and there is a risk that consumer behaviour could exacerbate, or create, shortages in this scenario,” it said.

And it added: “As of February 2019, many businesses in the food supply industry are unprepared for a no-deal scenario.”

Following a no-deal Brexit, UK citizens could find themselves subjected to longer waits at the border and exclusion from the use of e-gates for passport checks, the Government document said.

And about 240,000 UK companies which trade only with the EU would be caught up in customs processes, with a total administrative burden on business from customs declarations of about £13 billion a year.

The loss of the current “fully free-flowing border” with the EU could result in the flow of goods via Dover and Eurotunnel being “very significantly reduced for months,” said the document.

But it added: “French willingness to facilitate cross-border flows means that the Government does not currently expect ‘day one’ disruption to be at the most severe end of its planning assumptions.”

The introduction of EU export tariffs, including about 70 per cent on beef, 45 per cent on lamb and 10 per cent on motor vehicles, could have a “very severe” impact on some UK industries, said the document.

It was “impossible to accurately predict the ability of businesses to adapt”, but the risk of no-deal is “of major concern” for the car industry, both because of tariffs and disruption to just-in-time supply chains.

Disruption to closely-interwoven supply chains and increasing costs could “affect the viability of many businesses across Northern Ireland”, the document warned.

“There is a risk that businesses in Northern Ireland will not have sufficient time to prepare,” it said.

“This could result in business failure, and/or relocation to Ireland with knock-on consequences for the Northern Ireland economy and unemployment.”

Labour MP Martin Whitfield, a supporter of the Best for Britain campaign for a second referendum, said: “These are truly shocking admissions by a Government looking to abdicate responsibility for the oncoming chaos.

“We’ve known for a while that businesses aren’t ready for Brexit and that it’s disrupting their work already - big or small.

“Now we know a third of the most critical Government projects aren’t ready, while the economy is due to shrink.

“The Government has full ownership of this mess.

“By refusing to take no-deal off the table, the Government is threatening to plunge us into the abyss.

“We need to stop a no-deal catastrophe and put the final say over Brexit to the public.”