Scotland's place in Europe: our way forward

A 'No-Deal' Brexit

34. The UK Government's insistence on sticking to the main elements of the Chequers proposal as a template for our future relationship with the EU27 raises a very real risk that we will face a 'no-deal' outcome to the Brexit negotiations. This could occur either now with a failure to conclude a withdrawal agreement, or before the end of a transition period. The Scottish Government is clear that this would be a wholly unacceptable outcome and one that would have significant and lasting damage to our economic and social prospects. Leaving the EU without a deal, including a clear commitment on our future relationship, would cause substantial dislocation to our daily lives and a degree of economic damage that would undermine our long term prospects, lower our standard of living and result in an unacceptable rise in unemployment. Indeed the chief executive of the Royal Bank of Scotland recently warned that a no-deal exit from the EU could tip the UK back into recession^[25]. As we discuss later, the alternative is clear - continued UK membership of the European Single Market and Customs Union.

35. The risks and likely impacts that must rule out 'no-deal' as an option have been thrown into sharp relief by the UK Government's own 'technical notices'. These 'no-deal' notices describe the anticipated impacts of leaving the EU without a deal, and are inconsistent - not least that many rely on immediate deals being struck with the EU covering specific activities without which key parts of the economy will simply stop functioning. This includes a number of services we should naturally take for granted - for example, the necessary agreements to allow flights between the UK and the EU2^[26]. There is no guarantee at all that any such 'deals' can be agreed, in the absence of any over-arching agreement.

36. Even if specific deals can be achieved in such a 'no-deal' outcome, the impacts set out in the Notices^[27] are extremely damaging. For example:

• The prospect of border delays disrupting food supply chains, particularly for fresh foods;
• Plans to mitigate border delays by minimising customs checks for food and feed imports, potentially leading to an increased risk of food fraud;
• Road hauliers would need permits to drive legally in Europe, of which there are only a very limited number currently available;
• All UK drivers would need to carry a 'green card' showing proof of motor insurance in EU countries, including Ireland;
• Additional documents and health checks would be required for animals travelling to the EU, including proof of effective vaccination of pets, which can take up to four months;
• An end to accessing video or music streaming subscriptions, such as Netflix, from EU countries.

37. While the Scottish Government played a limited part in fact-checking drafts of these Notices on, for example distinct regulatory systems in Scotland, we do not consider these Notices to have served a useful purpose. If their intention was to reassure the public that a 'no-deal' scenario could be managed effectively, they have not been successful in that aim - with a broad range of stakeholders expressing serious concern about the scenarios depicted in the Notices. If their intention was to provide useful information to the public, then there were far more effective ways this could have been done. And if their intention had been to bring home to people how serious the impacts would be, then they may well have achieved that - but at the cost of increasing the normalisation of such an outcome in some people's minds, without a concomitant and repeated insistence by the UK Government that it recognises the unacceptability of this outcome and will rule it out.

38. For these reasons, as we have already noted, it is essential that the UK Government categorically rules out the prospect of a no-deal Brexit. The choice being placed in front of people in the UK and Scotland - between the UK Government's flawed blindfold Brexit deal or no-deal - is a false choice.

39. Notwithstanding our firm opposition to the UK Government's strategy, as a Government we are nonetheless developing detailed contingency plans for a no-deal Brexit to be triggered should this be the case. The Scottish Government is engaged with relevant public bodies and Scottish local authorities to assess how the risks and potential impacts of a 'no-deal' Brexit could be mitigated. And where action needs to be taken now, because there simply would not be time to take the necessary steps before 29 March 2019 - for example, in preparing the huge volume of secondary legislation, unprecedented in scale, pace and complexity^[28] that would be necessary in the event of a 'no-deal' Brexit.

40. In giving this assurance that the Scottish Government will take all reasonable steps to mitigate the risks and impacts of a 'no-deal' Brexit, it must be made clear that it is not in our power to remove these risks and impacts altogether. The issues highlighted above are not ones that we have the powers to alter. Working with partners in Scotland and, where possible, with the UK Government, we will do all we can to minimise the immediate impact of a 'no-deal' Brexit.