Report warns of Brexit damage to key economic sectors

Brexit poses 'significant worries' for all six of Scotland's key economic sectors, according to an official report which warns the prospect of EU withdrawal has already proved damaging.

Pro-Europe marchers on Edinburghs Royal Mile yesterday. Picture: Ian Rutherford

The report for the independent Scottish Parliament Information Centre (SPICe) says the ability of businesses to mitigate against Brexit risks is becoming more difficult by the day.

The uncertainty over the final Brexit arrangements has been described as a “high concern” by industry leaders in the six sectors which have been identified as the most important for Scottish economic growth.

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The SPICe research examined the attitudes of those involved in food and drink, energy/renewables, tourism, creative industries and the financial services sectors, as well as consulting other sources.

The hard-hitting report has just been published and has led to renewed calls for the UK to retain its relationship with the single market.

Major concerns centred around the uncertainty caused by Brexit, the impact withdrawal would have on the UK’s EU workforce and the potential for trade barriers to be erected. The report said “significant worries” had been identified in all six sectors and warned that small and medium-sized businesses would be particularly affected.

It said: “Unanimously industry leaders have expressed high concerns about uncertainty surrounding Brexit negotiations at the moment. While most growth sectors are hopeful that they may be able to cope with the serious obstacles posed by Brexit, they warn that their ability to cope is becoming more difficult by the day, and that for some business decisions it is already too late.”

It added: “The inability to make any long-term plans – which is particularly harmful for smaller enterprises, unable to make costly contingency plans – is already causing considerable damage.”

The briefing document, titled “The Impact of Brexit on Scotland’s Growth Sectors”, identified a host of issues. It found that industries in the tourism and food/drink sectors were already having issues with a lower influx of workers from EU countries. In the hospitality sector, the report notes that there is anecdotal evidence within the hospitality sector that the influx of EU workers has been in “steep decline”.

Recruiters in hospitality quote a fall in applications from prospective EU workers of “easily 75 per cent”. That finding chimed with a report published yesterday by Scotland’s Rural College (SRUC) which found recruitment agencies experienced a 10 per cent to 15 per cent shortfall in seasonal workers last year. The SPICe report also warned that a no deal scenario will hit exports.

Catherine Stihler MEP, co-chair of Scottish Labour for the Single Market, said the report was “alarming”. “There is a high level of concern in all six growth sectors about the uncertainty of post-Brexit arrangements, with Theresa May moving us closer to the cliff-edge by the day. Businesses are simply unable to make long-term plans because the Tories are in such chaos,” she said. “One of the biggest concerns is the impact of Brexit on the movement of people. Migrant workers from Europe are vital for so many industries in Scotland and across the UK, and the report demonstrates how this could particularly affect rural areas.

“If we are to leave the EU, then we must ensure we secure the least-worst option for both workers and employers, and that’s permanent UK membership of the single market.”

A spokesman for the UK Department for Exiting the European Union said: “We are working to secure the best and most ambitious deal for the whole of the UK, including Scotland.”