The Scottish economy could take a £3bn hit if the Brexit transition period is not extended, according to a new Government study.
The research found Scottish GDP could be up to 1.1% lower unless extra time is found for a trade deal.
Although the UK formally left the EU this year, the detail of the future relationship with the bloc is still to be agreed.
Transition arrangements run out on December 31st and critics worry there is not enough time to strike a deal.
With much of the UK government machinery focused on dealing with coronavirus, there are growing calls to shelve the legal deadline.
Michael Russell, the Cabinet Secretary for the Constitution in the Scottish Government, has called for pressure to be applied to the UK Government:
“Given the huge economic hit caused by Coronavirus it would be an act of extraordinary recklessness for the UK Government to refuse to seek an extension.
“The Scottish Government believes the best future for Scotland is to be an independent member of the EU - but regardless of people’s views on independence or Brexit, it makes no sense to impose additional damage on Scotland’s economy at this, of all times.”
On the new paper, he said: “The paper we are publishing today suggests if there is no extension, then even if a basic trade deal can be reached with the EU by December, there will be a cumulative loss over just two years of nearly £2 billion, rising to almost £3 billion if there is no deal.
“And the actual impact will be worse because the Brexit shock would come hard on the heels of Coronavirus hitting businesses at their most vulnerable and giving business and government, currently rightly focussed on this pandemic, insufficient time to prepare.”
The UK Government is still committed to a deal being secured and ratified by late December.
The EU’s chief negotiator, Michel Barnier, has previously said Brussels would be willing to extend the transition period if the UK funded the delay.
In a letter, he wrote: “The European Union has always said we remain open on this matter.
“Any extension decision has to be taken by the Joint Committee before July 1, and must be accompanied by an agreement on a financial contribution by the United Kingdom.”
