End of transition period raises serious challenges for Scottish businesses, says Holyrood Committee

11.12.2020

The Scottish Parliament’s Culture, Tourism, Europe and External Affairs Committee has warned that it is seriously concerned by the challenges facing Scottish businesses in the new year regardless of whether a Brexit deal has been reached.

In a report published today, the majority of Committee members have concluded that while a Brexit deal is preferable, any outcome will have a harmful impact on both the Scottish and UK economy.

The Committee noted that the business community still does not know what trading environment with the EU it will be transitioning to. Accordingly, the committee has called for businesses impacted by the changes to be given support and pointed out that this may require funding from the UK Government. The Committee also asked that businesses are given a six-month grace period to adjust to the new trading relationship after 31 December 2020.

Over the past few months, the Committee has taken evidence from organisations across the Scottish economy. The vast majority raised alarm at the continuing uncertainty surrounding the United Kingdom’s future trading relationship with the European Union. 

Given the time left for an agreement to be reached, the Committee believes that the time will not allow adequate scrutiny - by the European Parliament, UK Parliament or Scottish Parliament - before the end of the transition period.  

Speaking as the report was launched, Committee Convener Joan McAlpine MSP said:

“It is clear from the Committee’s extensive scrutiny that, deal or no deal, Brexit will have an immensely damaging impact on vital sectors of the Scottish and British economy. Even if a deal is reached, leaving the Customs Union and European Single Market will place an enormous bureaucratic burden on businesses who trade with Europe. This is ironic given that one of the arguments for Brexit was a reduction in red tape.

“We are just weeks away from the end of the transition period and we are none the wiser as to what the situation will look like in the new year. There is no prospect that businesses most vulnerable to the impact of Brexit will have sufficient time to prepare.

“The Committee has repeated its call for a six-month grace period for businesses and this report also argues that businesses impacted by the changes should receive support.”

“2020 has been a year of challenges like none of us have experienced before. In these times, we need the UK Government to step up and provide support and reassurance for both businesses and livelihoods. Instead, we are facing a leap into the unknown.

Deputy Convener Claire Baker MSP said:

“The key issues raised in this report are not new. While we welcome measures to mitigate the pain caused by leaving the Single Market and Customs Union, they are simply not enough to help our businesses weather the oncoming storm.

“We can see little prospect of any positive outcomes for the Scottish economy from the decisions which will be made in the coming weeks.”

“At a time like this we need Governments to support businesses and livelihoods so that they have a fighting chance of surviving and going on to prosper. However, the evidence we have heard, combined with an unprecedented global pandemic, has left our businesses struggling to find the capacity to adapt to rapidly changing situations. With an exit from the EU imminent, businesses face a perfect storm, and they need an urgent Government response to their concerns.”

Background

The published report can be found here

Dean Lockhart MSP and Gordon Lindhurst MSP, who was attending the meeting as a ‘substitute’ Member for Oliver Mundell MSP, dissented from this report and are not signatories to the report.

Issues highlighted in the report include: 

  • Representatives from the services sector were unanimous in stressing the impact of the loss of freedom of movement in diminishing the competitiveness of their sectors. The Road Haulage Association noted that the UK logistics sector relies heavily on labour from Eastern Europe and that the sector had not been included on the UK Government ‘Shortage Occupation List’.  The RHA concluded that “logistics and road haulage will definitely suffer from skills shortages post Brexit, the only question is to what extent. 
  • The importance of access to EU Programmes has been a constant theme of the Committee’s scrutiny. It remains unclear whether UK-based institutions will be able to access Horizon 2020 post-transition. Universities Scotland have stressed that Scotland’s track-record in research is a key economic asset and that loss of access to Horizon 2020 is the university sector’s “greatest concern” with Brexit.

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Tim Hustler: 07511 670 492

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