Claim that Brexit will cost every Scot £1,600 is not right
14 November 2019
What was claimed
Leaving the customs union and single market will cost every person in Scotland £1,600.
Incorrect. This comes from a dated estimate of how much less Scottish GDP will grow by 2030 in such a scenario, compared to remaining in the EU. It doesn’t represent a cash loss, but is how much smaller Scottish GDP would be per person compared to remaining in the EU.
What was claimed
Under Boris Johnson’s deal, Scotland’s economy would be 6% weaker than if we remained.
This is a dated estimate and isn’t definitive. 6% is roughly how much smaller the Scottish government estimated the country’s GDP would be in 2030 in the case of a free trade agreement where the UK leaves the EU customs union and single market, compared to if the UK had not left the EU.
Both of these claims are based on dated Scottish government analysis made long before Boris Johnson’s proposed deal with the EU, and they need a lot of context.
The 6% claim is an accurate enough, although it’s slightly dated analysis which isn’t based on an exact model of Boris Johnson’s deal.
The £1,600 claim is misleading as you can’t convert slower GDP growth into a uniform “cost” for every person as Nicola Sturgeon has done.
The research these claims are based on doesn’t estimate the amount people in Scotland will lose in cash—it’s the estimated amount the economy would be worse off by compared to remaining in the EU. It refers to the situation in 2030, rather than immediately after Brexit.
It’s not right to say this will cost every Scottish person £1,600
The £1,600 claim is based on Scottish government analysis from January 2018, which it repeated at the end of October 2019.
The original analysis compares estimates of Scotland’s GDP (which is the total value of everything that happens in its economy) in 2030 in several different scenarios.
One scenario estimated that under a free trade agreement post-Brexit, where the UK is outside of the EU’s single market and customs union, Scotland’s GDP would be 6% lower in 2030 than it would have been had the UK stayed in the EU.
As we’ve said about similar claimsbefore, that doesn’t mean the economy shrinks by 6% (or that people in Scotland lose £1,600 in cash). It means that, according to these estimates, it’s expected to grow by 6% less than it otherwise would have.
GDP growing by 6% less up to 2030 is the equivalent of about £1,600 per person if you divide that amount of GDP by the population of Scotland.
But you cannot say that slower GDP growth will cost every person £1,600.
Individual incomes are affected by a number of factors including the cost of living and government welfare spending. So slower GDP growth on its own will not automatically mean less in people’s pockets. Additionally, even if incomes did grow less slowly, they would be unlikely to hit everyone equally.
In any case, the 6% figure isn’t definitive. It’s a relatively old estimate that relies on a lot of assumptions.
As we’ve written before, the UK and EU haven’t negotiated a free trade agreement yet so we don’t know what Boris Johnson’s trade deal would look like. However, the Scottish government’s analysis is based model of a “free trade deal” which shares broad similarities with what Boris Johnson wants to negotiate.
We’ve written before on what you need to know when interpreting claims from economic models.