Scotland’s ‘Brexit disaster’

The scale of the damage caused to Scottish businesses as a result of the UK Government’s Brexit deal has been set out by Europe and External Affairs Secretary Michael Russell.

In a statement to parliament Mr Russell said companies had been left ‘toothless’ following the UK Government’s move to make itself - deliberately and permanently - a third country with a more distant, more expensive and less advantageous trading arrangement with its former EU partners.

Mr Russell said the Scottish Government would continue to do all it could to mitigate the impact of Brexit – including backing a call from the food and drink industry for a six month grace period to allow companies more time to cope with the changes.

He also urged the UK Government to improve the information it shared on emerging issues at ports.

The warnings come just over a month after the UK Government’s Trade and Cooperation Agreement with the European Union (EU) came into effect on 1 January.

Since then a range of concerns have arisen including:

• exporters facing new customs controls and  IT systems failures leading to stock delayed and spoiled at ports in the UK and EU. Estimates suggest as much as £1 million a day is being lost by the seafood industry alone

• significantly reduced freight flows across the Channel with evidence hauliers are avoiding the UK altogether to avoid delays and complicated paperwork

• the UK Government’s own Reasonable Worst Case Scenario which predicts 142,000 tons of perishable goods including food, feed and drink could be wasted over the next six months because of Brexit border disruption

• an estimated £11 million of losses to Scottish seed potato farmers who will no longer be able to export to Europe

Mr Russell said:

“It is an incontrovertible fact that four weeks into the new trading arrangements, the problems for businesses are not diminishing, but multiplying and spreading across different sectors of the economy.

“The disruption to the seafood sector has resulted in the damaging delays, huge costs and devastating losses which we feared would be the outcome of becoming an EU third country and dealing with new and untested processes.

“Unfortunately it is not just the fishing part of the food industry that is being impacted. A whole new category of prohibited and restricted goods has been created meaning Scottish exporters can no longer trade their produce freely with the EU.

“Even the UK Government has now admitted that these are not ‘teething issues’ – they are a permanent exclusion from the single market that leaves many businesses in Scotland toothless in a competitive modern economy.

“What we ended up with was the hardest of Brexit deals, recklessly pursued at the very depths of the pandemic. That was bound to be a disaster, and it has been.

“The Scottish Government will of course continue to do everything in our power to mitigate the impacts of Brexit on this country, its businesses and its communities. Far from being over, the problems created by Brexit are getting worse and we face more difficult times ahead.”

Background

Last week, the CBI, the British Chambers of Commerce, Make UK, the Federation of Small Businesses and the Institute of Directors issued a statement setting out the substantial difficulties faced by firms adapting to the new customs processes, obstacles to moving goods through the Dover-Calais route and the shortage of informed advice.

The Scottish Government has today announced a new £7.75 million funding package offering support to fishermen, seafood businesses and ports and harbours threatened by the ongoing effects of coronavirus (COVID-19) and EU Exit.

The Scottish Government is calling for the UK Government to agree a common set of data with the devolved administrations to provide the clearest evidence of the impact of Brexit.