Trading Places

Regardless of your vote in the EU Referendum, most would agree Brexit will be a challenge to us all.  Beyond the tangible and very real challenges of citizens’ rights, currency fluctuation and disentanglement from a union that has helped shape our laws for 40 years, the UK’s decision to leave the EU represents a difficult hypothetical problem for Scottish nationalists.

Having spent the entire campaign for the last “once in a generation” referendum arguing the continuation of the UK’s single market was a key facet of their blueprint for independence, the SNP now have to find a way to argue that the European Union’s single market is more important to Scotland than the UK’s.

This is a particular problem when the Scottish Government’s own figures show that Scotland ‘exports’ four times more to the rest of the UK than we do to the EU.

00493262-1050
Export Statistics Scotland

My own preference would be to keep both single markets but it takes self-delusion borne of nationalist zeal to look at these figures and suggest leaving the UK’s single market in order to stay in the EU’s.

Enter Alex Salmond and Joanna Cherry.

…just remember that Scotland is England’s largest export market, the fact is England exports more to Scotland than it does to the United States of America.

Alex Salmond, BBC Radio 4 Today [LINK, 1:55]

…it’s a little known fact this but… Scotland is actually England’s biggest export destination…

…I think what Mike (Russell) is getting at is the fact that, for us, at the moment the growth market is the EU.  Scotland’s exports to the EU are growing.

Joanna Cherry, BBC Daily Politics [LINK]

Essentially, there are two arguments here:

  1. England exports more to Scotland than anywhere else so of course they won’t do anything to threaten that trade and we’ll continue to do business like we currently do even if independent; and
  2. Scotland’s exports to the EU are growing so it’s more important to stay with that market.

Each in turn then.

Is Scotland the biggest export destination for rUK?

NB: I have assumed the SNP politicians meant “the rest of the UK (rUK)” rather than “England” here.  Primarily because independence would leave the former as the continuating state and, as far as I’m aware, there are no export statistics for England alone.  The increase in direct references to England from SNP politicians, as opposed to 2014’s careful reliance on euphemisms such as Westminster, is perhaps a topic for another time.

First thing to note is comparing data is actually quite difficult.  Intra-UK statistics on trade are not commonly produced and I’m not aware of any report on UK exports excluding Scotland’s, therefore I’ve had to draw several different sources together to make estimates.

My presumption is that Salmond and Cherry have used the Scottish Government’s Quarterly National Accounts report for the value of rUK ‘exports’ to Scotland [LINK].  This assumption is supported by Cherry quoting £52 billion for last year (Table G).

Further, I presume they have compared this to HMRC’s Overseas Trade Statistics [LINK] which shows UK exports to the USA, our largest single country export destination, as £42 billion for the same year, 2015.

£52 billion is more than £42 billion so Scotland is rUK’s biggest export market, right? Wrong.

Whilst the ScotGov stats cover goods *and services*, OTS only includes the former.

It’s also worth noting UK stats obviously include Scotland’s trade with the US.  When these two distorting factors are corrected¹, the comparable data looks very different.

For 2014, the rest of the UK exported £84 billion to the USA.  Compared to rUK ‘exports’ to Scotland of £50.5 billion.  Over £30 billion more.

So Cherry and Salmond are simply wrong.

But biggest export market or second biggest export market, doesn’t the point remain that no country would volunteer to jeopardise such a valuable market… well perhaps… if you haven’t been paying attention for the last six months.

The 27 countries of the EU account for just under half of the UK’s exports and, as we’ve seen in the last week, the current proposal from Theresa May will see us leave the single market and the customs union, a move which is widely expected to damage trade.  To suggest economic logic will prevail simply ignores the depressing reality.

Besides, if the SNP’s argument is that Scotland should be independent to maintain our position within the EU then our trading relationship with rUK will be governed by the agreement between London and Brussels.  Whatever argument is made for loss of trade by virtue of a UK-EU border must logically apply whichever side of that border Scotland finds itself on².

And when your trade with one of those entities is worth four times more than the other… well we’ve already seen that economic logic doesn’t matter to nationalists.

What is clear to all is that the UK is a hugely successful, highly integrated single market with billions of pounds worth of trade supporting hundreds of thousands of jobs across the union.  Any move to jeopardise this should concern people across the UK.

Are EU exports the ‘growth market’ for Scotland?

Short answer… no.

The latest Scottish Government export statistics [LINK] show Scottish exports to the EU fell by 7.8% from 2013 to 2014; meanwhile our exports to the rest of the UK grew by 3.2% across the same period.

Given Joanna Cherry specifically mentioned, twice, that our EU exports are growing I thought perhaps she was referring to a longer timescale.  The Scottish Government’s export statistics go back as far as 2002.  This is the growth they show for rUK and EU trade from Scotland³ (goods and services).

scottish-exports-final

Clearly over the time period covered by ESS, our exports to rUK have grown far more than those to the EU.  Indeed, the only possible way by which you could argue the EU is the ‘growth market’ is to compare 2014’s figures against 2010’s which would helpfully include a bumper increase for the EU in 2011.

New ESS figures are out this week so perhaps Ms Cherry has had a sneak preview of the report and knows it will show an annual increase of EU exports exceeding that for rUK trade?  Aside from questions this would raise on improper leaking of civil service reports to the governing party, would a one-year increase really constitute the definition of a “growth market”.

Even so, assuming rUK trade wouldn’t change at all, it would take 15 years of 10% faster growth for EU exports to reach parity.   And for what?

The SNP have a problem.  In 2014, in an attempt to hoodwink people into a “minimal change” prospectus for independence, they committed themselves to the importance of the UK’s single market.  By virtue of mutual membership of the EU and a sterling currency union, trade with England would continue unabated.

Now, Brexit has simultaneously offered the nationalists a strong emotional argument for separation whilst potentially torpedoing an economic case that was already fundamentally flawed.

It is simply illogical to claim Scotland needs independence to ensure a UK-EU border doesn’t damage our trade with the European Union, whilst denying the very same border would damage our much more valuable trade with the UK were we to find ourselves on the other side of it.

In other words, if we end up with a “hard Brexit” that is damaging to the UK, and therefore Scotland, then by definition independence would take a similarly “hard” format.  Whilst I’d happily agree with the SNP in arguing against a “hard Brexit”, I won’t join them in simultaneously backing a far more damaging “hard independence”. 

Politicians will, of course, spin the data to suit their position but we’d all hope the data enjoyed some relationship with the truth.  Sadly Mr Salmond, whilst humbly declaring he was “delighted to introduce some facts to the BBC”, simply made up his own.


NOTES

¹ Note on sources and producing the comparable data.

Scottish Government Quarterly National Accounts Table G [LINK] provides the data for rUK ‘exports’ to Scotland.

For rUK exports to the USA, the value of goods and services are taken from Table 9 of the UK Balance of Payments Pink Book [LINK], with the value of Scotland’s contribution to these UK exports to the US taken from Export Statistics Scotland [LINK].  Note that I have therefore used 2014 as the last available year for which there is data in all sources.

(£87983m – £3985m = £83998m)

² Which is why the SNP will shortly pivot towards joining the EEA / EFTA as their proposal for independence.

³ Worth noting that ESS does not include oil and gas exports.  Given the volatility in the value of those exports, it seems sensible to gauge market growth without them.  For info, in 2014 Scotland exported £8.3bn of oil and gas to rUK and £11.2bn to the rest of the world (no record of exports specifically to the EU).

⁴ I have contacted both Joanna Cherry and Alex Salmond, as well as SNP Press Officer Tom French, on twitter to enquire as to the source of the figures.  I have had no responses so far.

I have emailed Alex Salmond’s MP office asking the same and Alastair Cameron of Scotland in Union has contacted Joanna Cherry’s office.

If there are any responses provided I will update this blog.

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48 thoughts on “Trading Places

  1. The monumental scale of “unknown region” circa £40bn is likely to put all these figures in the bin.
    Until such time the SNP actually get to grips with Scotlands true economic activities, all in, out, soft or hard is simply conjecture.

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    1. Hi Ian, thanks for the comment.

      Afraid you’re wide of the mark with the “unknown region”, though. For a start, the unknown region assignation is used in HMRC Regional Trade Statistics which are not cited here and form absolutely no part of any of the statistics I’ve referenced. You may as well be quoting methodology issues with Spain’s census for all the relevance it has to this topic.

      Secondly, as I’ve covered here already https://whytepaper.wordpress.com/2016/09/01/oil-exports-unknown-region-and-trade-balances/ it’s really just a myth used by nationalists to cast doubt on figures they don’t like and has zero bearing on anything of note.

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      1. So, does the unknown region data exist or not?and is it in any way included in your analyse? You concluded Unknown region oil and gas was roughly £13bn, I don’t see this in your presentation here.
        Obviously the Scottish government couldn’t include these sums in their figures as they default to ruk. However, for the purposes of exports, alone, they would surely hold significant relevance to scottish exports.
        It seems a chuncky sum of exports, to simply ignore or not include.

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      2. The “unknown region” does not exist in any of the sources that I have cited in this blog. It only exists within HMRC Regional Trade Statistics which are fairly new, working out the methodology (which has changed significantly this year) and which I’ve said before are pretty poor.

        As such, the “unknown region” potential for distortion simply does not influence the content of this blog.

        I hope that helps.

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      3. What I’m really getting at is: at what point in any data set is ‘known region’ Scotland, and ‘unknown region’ UK, separated and given domicile back to Scotland in terms of exports.
        I can’t see this transfer in any data.

        It is also an extraordinary leap to imagine much, in terms of exports, happening outwith UK Land mass (un-coded) other than ‘at sea’ activity.

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      4. See response above. You’d have a point if I’d used HMRC RTS as a source, I’d then need to apply a portion of the “unknown region” to Scotland to even things out. Given the methodological restrictions of RTS, I tend not to use it and haven’t here.

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  2. Thanks for this clear analysis, I feel much better informed on the economic forces at work in the arguments put forward by the SNP and their opposers.

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  3. Great blog again Fraser. As one that does plenty of analysis like this in my day job, you’re approach to unpicking the spin and getting the relevant info is spot on. Keep on doing what you’re doing please.

    Ian, you can’t get away with this nonsense any more. If you can’t argue your case honestly, best not to argue it at all.

    Liked by 1 person

  4. Just so you know – the Official site for the Clown Office – Scotland has responded to your blog post (even linking to you). The Clown Office has a different take on events from you.

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  5. Quite a sad article. I’ve read a fair few tweets on this today and plenty vitriol. Will this provide much consolation to us when the UK has left the EU? To be able to claim- well… Scotland would have been even worse off had it voted for independence? I think there is a danger in losing sight of where we are- on the very edge of the cliff?

    These games with large numbers (and they are played by both sides) are ridiculous. My company buys loads of gear from manufacturers in England. It also buys loads of gear from manufacturers in the EU. I’ve never analysed where we buy more from because that information would not matter- trade barriers with either would lead to increased prices being passed on to consumers. Its retail- not like selling medicines or bread… people buy less and we suffer. They buy much less and we go under.

    The FM has proposed a solution based on work by her panel of experts to try and find a way of staying in the EU and UK or at least within the single market and UK. Since doing so she has received little but abuse. Only in Scotland could a politician supported by about half the electorate produce a plan to support the aims of a large proportion of the other half of the population following the EU ref result and be vilified.

    Take the name Nicola Sturgeon out of the equation. Take the SNP out of the equation, and the “highly likely” referendum out. Take the saltire and the union jack out- take personalities and our country’s politics out and the last few years and take all the vitriol and tweets. Take all our combined experience of national debate out and think about where we want to go. A plan has been put forward and it deserves consideration rather than derision. Or constructive criticism. I just can’t accept a scenario where losing free access to the European single market is being pushed as the least worst option here.

    The two scenarios that could unfold if no compromise is reached have not played out. None of us know which will be successful and which will fail. Perhaps we have a dire future in store in either scenario? Perhaps we would be successful in either scenario? I know that if we fail as an independent Scotland we will only have ourselves to blame. If we fail as part of the union we will blame England and Westminster for destroying us.

    Anyway- I just wanted to say how profoundly depressing I find this whole angle. We were told voting No would give us the “Best of Both Worlds” over and over again, endlessly, relentlessly. And now we are told we have to accept the best of a bad bunch. Suck it up. Just bite down. It makes me want to puke.

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    1. Hi Tam, thanks for the comment.

      I’m not sure where you get the impresion that I am deriding Nicola Sturgeon for the supposed compromise that she has offered; nor any plans to retain Scotland’s place within the European single market. In fact, if you read the article you’ll see that I’ve specifically stated that my preference is to maintain both the UK and EU single markets.

      I am simply responding to and fact-checking claims made by nationalist politicians in an attempt to build up support for independence on false pretences.

      If that makes you want to puke then so be it.

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  6. Hi Fraser

    I did read it and I get it. Please read my response more as general howl of anguish at the national debate than specifically relating to what you wrote. I’ve posted it here because I was reading a load of tweets deriding Joanna Cherry who is IMHO one of the most intelligent politicians in the UK today and amongst them was your piece. She hasn’t responded to questioning of her claim and I would be interested to hear her justification. I’ve met her and she seemed really nice. I just feel the whole premise underpinning both the claim and counter claim is absurd- which vast market is more important to us. It is idiotic. We in Scotland, on the periphery of both the UK and the EU lose access to one or to the other and there will be a great multitude of people on the scrapheap. And that is where we are in the early 21st century.

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    1. I suspect Ms Cherry has simply been fed bad information from an SNP staffer / policy SpAd which they are currently looking to find a way to spin out of. Personally I find her to be incredibly smug and arrogant MP but that’s not unusual for politicians and I’m basing this solely on her TV performances. I’m sure she’s perfectly reasonable in person and, to be fair, none of the article is personal anyway.

      It’s an unpleasant situation we find ourselves in, not just with Brexit and the ongoing independence question, but global issues like Trump and the wider rise of nationalist populism.

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    2. I’m with you Tam. This article has some figures and references, but a lot of rhetoric. In my opinion it would be better sticking to the figures and conclusions, and cut the anti-SNP rhetoric. I think Fraser is capable of doing better, and in general I hope Indy Ref 2 will spare the rhetoric and increase the factual angle – both sides.

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  7. I am sure we will find out Fraser- you could well be right. Do you know what I mean though? What does it all prove? That we are not England’s most important market? Looking at the players I think we come 3rd on the list behind the USA and of course the vast bloc of the EU which dwarfs all. For Scotland: England, Wales and Northern Ireland are undoubtedly our most important market, followed by the EU, followed by the USA.

    So we are being asked to leave our collective UK’s largest export market or to become independent and leave our (Scotland’s) largest export market? I am pretty entrenched in my views Fraser as I am sure you are also. Taking my SNP hat off I think the choice now is quite bleak and the next indyref (presuming there is one) will be in stark contrast to the last one in tone.

    Looking back I certainly don’t think the stakes were as high before. Both sides hyped everything up to be catastrophe versus prosperity when it was a change of governance rather than this fundamental change to trading conditions. That is how it seems to me now.

    Anyway- I’ll leave you be. Enjoy your week.

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      1. Ha! The pedant in me wants to point out that neither Joanna Cherry nor Alex Salmond are part of the Scottish Government. How’s that for a fact! Anyway- you may have picked up from my tone that I am trying to be a bit less partisan and a little more objective. It is what this discussion needs although it is not easy. Goodnight.

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  8. “First thing to note is comparing data is actually quite difficult”

    Indeed, and the “rUK exports more to Scotland than the USA” view is not one I would have subscribed to, unimportant though it might be. However, what this article does manage to do is accept a much more important statisitic – that the rUK exported and exports MORE to Scotland than Scotland exports to the rUK (about 10% more). Thanks for that.

    For goods alone, for the up to date year to September 2016 HMRC Trade Info:

    https://www.uktradeinfo.com/Statistics/RTS/Pages/default.aspx

    you can see that Scotland’s exports in goods to the USA increased 7.2%, NI by a massive 29.8%, compared to the last year’s, whereas England’s decreased by 3.2% and Wales decreased by 17.9%. It appears the two EU-friendly countries of the UK are progressive, whereas the two anti-EU are retrogressive, and that Scotland and NI are therefore better outside the UK – a claim quite frankly showing that statistics can easily be abused.

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  9. Incidentally, what the article demonstrates is the value of the rUK exports to Scotland – 16% of its exports. They’re at 60% of the rUK exports to the US, or to put it another way, the rUK exports just 66% more to the USA with a population of 320 million – 60 times that of ours with 5.4 million.

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    1. yesindyref2

      Aye- what I was trying to get at was that there is an obscuring of the real issue by this whole argument (and to give Fraser his due he does make the crucial point that EU exports trump everything in importance for UK. And by extension the market that is key to rUK is key to Scotland) . The dismissal of the importance of Scottish exports to rUk is as dismal as the reciprocal dismissal of the importance of exports to rUK by our side.

      Scotland is a net exporter and that is a strength but in this debate it is portrayed as a weakness. England is a net importer and that is not seen as a weakness. I would say we need a grown up debate guided by a well informed and enquiring media but the time for that was before June last year. Now being told to choose in Scotland which of our largest markets we want to lose access to is ridiculous.

      Both sides in the debate in Scotland have glaring similarities and glaring deficiencies- we need to cut through blinkered outlooks and make decisions based on the best way forward. I’m as blinkered as the next guy of course.

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  10. Excellent – well-researched, fair-minded, carefully composed and expressed as usual with you, Fraser.

    I don’t yet see any sound basis for the criticisms above of what you actually say – rather a shifting of grounds and goalposts to demonstrate, errr, other preferences.

    Bearing the mind the earnestness of present circumstances at (too) many social levels – locally & regionally, nationally, supranationally, inter-nationally, globally – I also appreciate the growth of a sort of urbane humour in your writing. This is the complete reverse of facetiousness: it’s a light touch, even exemplary grace, that values human interests, the issues of common humanity, above points-scoring, quagmire squabbles, … and worse.

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    1. Ian – I don’t really know how to tell you this any differently but I’ll try one more time…

      The “unknown region” is an allocation within the Regional Trade Statistics for UK exports which cannot be allocated to a particular region according to the methodology used.

      The stats referenced here are not the Regional Trade Statistics and have nothing to do with the Regional Trade Statistics.

      The ONS report covers ALL UK exports regardless of which region they are allocated to in a completely separate report. So they include ALL exports. Everything.

      Does that help or are you fixated on trying to undermine what I have written here just because you don’t like it and think this “unknown region” fallacy gives you a way to do that?

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  11. Forgive my persistence. But, as you continually reference independence in your report, ignoring obvious data that would be only relevant upon independence, is likely to be relevant.
    You state Scottish trade with rUk versus EU figures, knowing those trade figures are only there whilst within the union. Upon independence, you know, they would be greatly different and improved.
    It’s an odd position to take.

    Currently, rUK export oil and gas to Scotland on paper. (Any off shore product landed in rUK then piped to scotland)

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    1. Or greatly different and much worse. Read up on border effects. Think about what happens when Scotland had a different currency than the rUK. Contemplate the fact that just 70 businesses in Scotland account for half of our exports. What would happen if the life sciences and financial services sectors both picked up and moved south to be in a 10X bigger market that isn’t riven with uncertainty?

      Liked by 1 person

    2. No, that’s untrue. There is no record of ‘exports’ which shows rUK “exporting” Scottish oil back to Scotland. If you wish to disagree then please provide a link to the report.

      And you just saying “it’ll improve when independent” doesn’t make it true. Why would it? Give me evidence

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      1. I’m not against your work Fraser even though an Independence supporter for 44 or 45 years. In fact I’d truly love a set of figures for everything that both “sides” totally accepted and then interpreted or “spun” any way they wanted. So a £100 billion surplus / defict would be excellent / disaster / unimportant / irrelevant, delete as appropriate. However (you knew that was coming), not on oil but on exports of goods there’s this from HMRC for Year end Q3 2016:

        https://www.uktradeinfo.com/Statistics/RTS/Pages/default.aspx

        Add up the figures for England, Wales, Scotland and NI for exports and subtract the total from the UK total figures you get a “black hole” of £23.5 billion which is explained as it says:

        “Note: United Kingdom figures include trade that cannot be allocated to a region.”.

        That’s just goods not services, and to have a complete picture, that discrepancy would have to be clearly and provably explained, as would one for services if there is one. Otherwise any analysis of exports – by either side – is subject to a potential £23.5 billion error for one year for goods alone.

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      2. Which may be relevant if I had used RTS as a source but, per my discussion above with Ian, I have not and therefore any justifiable complaints about RTS are completely irrelevant.

        I try not to use RTS for specifically these reasons, there are a number of methodological issues with it.

        So there’s no £23.5bn error in the figures I’ve cited above

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      3. Fraser, I didn’t say whether there was an error or not in your figures. But HMRC figures are one source of info – and ones that directly relate to any revenue received. It’s one methodology versus another.

        HMRC made during the timescale of Indy Ref 1 a valiant attempt to disaggregate figures by “region”, of which Scotland was one. Those figures were useful, as they disagreed with other figures, including those in GERS which are derived of course from Treasury figures one way or another.

        The UK accounts in themselves are a “black hole”, and it will be interesting to see if ESA2010 currently being implemented (were due 2014 but the UK got a derogation along with some other EU members), makes any difference to the previous slacker ESA95 methodology. Some say it won’t, I think it will, some at least.

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      4. Sorry but your first paragraph doesn’t seem to make sense. For a start, this isn’t a calculation of “revenue”, i.e. government revenue, but of exports. I’m also not sure how they relate “directly” to anything under discussion here. No-one is suggesting that the RTS methodology is used in any of these calculations and, even if they were, it seems a bit odd to me to highlight discrepancies in a methodology which isn’t being used anyway… precisely because I’ve deemed it irrelevant…

        Also not sure which disaggregation into “regions” you are referring to or where it contradicts GERS. I’m assuming this is something to do with tax revenue rather than exports given GERS has nothing to do with the latter? Are you referring to CRA / PESA?

        ________________________________

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  12. Fraser, very briefly and simplified because it’s a big subject, if my company makes £1 million worth of sales in a year say, lucky me, then there are quarterly VAT returns to make out, luckily simplified since a lot of years now, and quite likely various taxes and duties to pay.

    Now, if I export the lot outside the EU, or b2b inside the EU but outside the UK, there are other returns (electronic paperwork), but broadly speaking the VAT / tax / duty I pay is zero, so for the sake of argument, it is zero. There would be corporation tax presumably.

    But I still have to account to the HMRC for those sales and, if neccessary, prove they left these hallowed shores. Otherwise I could get dingied with 1/6th in terms of VAT, and other potential taxes / duties as well. Oh, and penalties and interest, perhaps even prosecution!

    So, to cut a long story short, the HMRC have records.

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    1. Well congrats on the sales :-), but I still have no idea why that has the slightest thing to do with the point at hand. Unless you’re trying to make a wider point?

      I don’t think I’ve ever said HMRC don’t have records. I’m saying there are various sources of statistics which are intended to inform government and the public of various aspects on industry. Whilst I’m sure RTS, in its embryonic stage as a set of statistics, is useful to someone for something, it’s not useful for the comparisons that are made in this blog hence why they’re not referenced…

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  13. Hi Fraser.

    I’m struck by the increasingly frequent assumptions (in this post and across other media) that independence will force Scotland to make a binary choice between trading with the UK market and the EU market. This act of choosing or having to prioritise is then purported to “damage” or “jeopardise” Scotland’s trade relations with one or the other. Alternatively, it’s portrayed as a zero-sum game – access one or the other but not both.

    I suppose this naturally leads to the conclusion that, if so, it’d be best for Scotland to stick to the bigger UK market (and presumably by implication give up on independence).

    But is this the case? Would an independent Scotland be forced to choose and then find itself cast adrift trade-wise by either the EU or by the UK? In a mitigated scenario would our trade with either be damaged or jeopardised? Scotland currently exports significant amounts to both areas and Scotland is one of the UK’s main export destinations. In fact the rUK exports more to Scotland than vice-versa. Why would any of this change to any significant degree after independence?

    As you state, your preferred option would be for Scotland to be able to access both markets. I’m struggling to see any scenario for an independent Scotland where that could not be the case. I’d presume both markets currently enjoy the trade relations they have with Scotland and are satisfied with the Scottish goods and services they import. Is this notion of choosing not a false choice? Or maybe I’m missing something.

    Regards

    Robert

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  14. You can’t simply estimate the damage to Scottish exports by comparing the overall size of rUK and International/EU exports. Any serious analysis would examine the composition of Scottish exports, and how the introduction of tariff and non-tariff barriers on both the UK side and the EU/international side would affect demand.

    Some basic points:

    1. The majority of Scottish manufacturing ‘exports’ (valued at 26 Billion) go to international destinations rather than rUK. Unless you happen to believe that the UK will be able to negotiate it’s non-EU trading relationships on better terms than the EU, on this basis Scottish manufacturing exports will likely be more damaged by staying in the UK than by Scotland leaving to join the EU.

    2. Most Scottish exports are services (valued at 38 billion), and 70% of these go to the UK. Compared to other exports, services should be much less effected than manufactures by a reversion of the UK to WTO rules (finance and education an exception depending what side of the border Scotland is on).

    3. The single largest Scottish export item (crude oil and gas) is not included in the statistics. I cannot see how an EU land border would limit overall demand on this (but please correct me if I am wrong). Similarly with Scottish utility exports to rUk (valued at 6 billion).

    4. If trade barriers between Scotland and it’s neighbors are to damage exports, this requires that trading partners reduce their consumption or substitute with domestic production or a different trading partner. Regarding the latter, it’s really not clear with whom would substitute Scottish (EU) trade, given that they will that alternative exporters will likely not only face the same tariff and non-tariff barriers as Scotland, but will have the added barrier of thousands of miles of land and sea. The same cannot be said for the EU should Scotland remain outside it’s border.

    Obtaining accurate estimates on the damage to Scottish trade (long and short term) in either scenario obviously would require a lot of work (and uncertainty). But the assumption that trade barriers resulting from Scottish independence (inside the EU) will be 4 times as damaging as Brexit is nonsense.

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    1. Hi Al, thanks for your detailed comment.

      First of all, I’d say that I haven’t argued the impact will be 4 times as damaging as Brexit, simply that the same trade barriers which will exist along a UK-EU border would apply equally whichever side of that border you found yourself on and that our trade with rUK is worth 4 times more. You make a valid point that it would be worth those making the case for change delving into the figures in more detail.

      In response to your points:

      1. The latest figures have manufacturing exports to the rest of the world at £15bn, of which £7.5bn are destined for the EU. This compares to £11.3bn to the rest of the UK – so your £26bn refers to the total rather than the international exports which I initially assumed. I have absolutely zero idea what impact Brexit will have on non-EU trade, it may well be that we can achieve beneficial deals, they may be worse. No idea. Although it’s worth noting that our biggest export destination is the US with whom there is currently no trade deal.

      2. Not sure whether services are more or less vulnerable to trade friction but worth noting that financial service exports to rUK are £8.8bn which would seem to be at particular risk from the border effect, particularly the now age-old currency question. Given the importance of the financial services sector to the UK economy, however, we’d all be hoping they’re a key part of UK-EU negotiations.

      3. Would tend to agree but there are other factors with the oil and gas sector that independence would effect – primarily the impact on operating costs, tax regime, operator confidence and decommissioning support. None of these are applicable to this topic however. At this stage, I don’t think rUK would have the interconnector capacity to import enough energy from elsewhere. Also need to factor in the impact fracking in England will have, etc. But direct impact on oil and gas exports? Who knows but that holds true for current exports to rEU as well.

      4. Again, surely this same logic applies to rUK and rEU?

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      1. Thanks for your response.

        “First of all, I’d say that I haven’t argued the impact will be 4 times as damaging as Brexit”

        Not my accusation, but apologies if it came across differently. My impression is that among unionists it is commonly stated, assumed or implied that the magnitude of damage is proportional to the value of trade. As I argue there are good reasons why this likely isn’t the case. It can’t even be safely assumed that negative effect of trade barriers resulting from independence within EU will clearly outweigh those remaining in remaining in WTO reverted UK. But, you are right that it really is the responsibility of the Scottish government to commission independent analysis on this.

        on point 1: Yep, as I stated the 26 billion refers to total manufacturing ‘exports’ (UK+international). The majority of these (15 billion) are roughly split between the EU and non EU countries. Figures are not disaggregated by country, but given that EU FTAs (signed, in force, or in negotiation), cover the large majority of world landmass, I imagine a chunk of the 7.5 billion is already covered or will be in the near future. At any rate, the notion that the UK will be able to replicate or exceed the number and favourablility of EU FTAs requires Fox/Hannan levels of delusion.

        On point 4: not sure to what you are referring. The point is that the EU27 can substitute UK trade much more easily than vice versa. If you think otherwise would be interested to hear why.

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  15. Fraser
    A wee pressie from an Indy supporter. The page you reference was updated, I’m guessing the 2014 figures were overwritten with 2015 figures. Personally I think the page should have a line on it “updated 27th January 2017, previous version here – link”. I’ve been caught out with this for GERS where they update the figures so people like you – and me on the other side – are left with egg on our faces.

    Here’s last year’s page (2014 figures) -(July 2016 snapshot):
    http://web.archive.org/web/20160715170619/http://www.gov.scot/Topics/Statistics/Browse/Economy/Exports/ESSPublication

    Here’s this year’s (2015 figures)
    http://www.gov.scot/Topics/Statistics/Browse/Economy/Exports/ESSPublication

    You’re very welcome to give the ScotGov stick for this. I don’t think it’s deception, but it’s very very very annoying. Version control should be made public.

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    1. Yes, the report was updated this week. I noted that was due in the blog. Not on laptop so can’t check links yet have they wiped the old files? That seems odd.

      I deleted the “testing” comment you made,btw

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      1. Thanks. I didn’t go into any depth, it was just a “heads up”.

        It’s understandable they want one single current or latest page, but very annoying there’s no date or link back to the previous version. Might be worth mentioning in your next article (you can mention me by moniker if you like), as I daresay “they” read your blog …

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  16. yesindyref2:

    To quote a W1A line “I’m not being funny or anything, but ….” a small point

    If you’re seeking a mention, might it not be an initial concession to use a real given moniker at some point, rather than sticking with a big-cause incognito? 🙂 Otherwise, looks too much like free advertising plugs, I think …

    Like

    1. I think “yesindyre2” says it all. An indy supporter supporting a non-indy supporter on a point, that makes the point itself non-partisan. It’s not for my benefit, it’s not even for Fraser’s, it’s aimed at the vain hope that for Indy Ref 2, the electorate might get the best possible and most accurate information from BOTH sides.

      Like

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