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Disunited Kingdom? Brexit, trade and Scottish independence

Author

Listed:
  • Hanwei Huang
  • Thomas Sampson
  • Patrick Schneider

Abstract

Scotland is a small, open economy that mostly trades with the rest of the UK. There is around six times more trade between Scotland and the rest of the UK than predicted by a standard gravity trade model. Scottish independence would raise trade costs within the UK by creating a new international border. We use a quantitative trade model to study the impact of changes in trade costs resulting from Brexit and independence on Scotland's economy. We estimate that independence would be two to three times more costly for Scotland than Brexit. Moreover, rejoining the EU following independence would do little or nothing to mitigate these costs. The combination of Brexit and independence is estimated to reduce Scotland's income per capita by between 6.3% and 8.7%.

Suggested Citation

  • Hanwei Huang & Thomas Sampson & Patrick Schneider, 2021. "Disunited Kingdom? Brexit, trade and Scottish independence," CEP Brexit Analysis Papers 17, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepbxt:17
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    File URL: https://cep.lse.ac.uk/pubs/download/brexit17.pdf
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    Cited by:

    1. Hanna Adam & Mario Larch & Jordi Paniagua, 2023. "Spain, Split and Talk: Quantifying Regional Independence," CESifo Working Paper Series 10742, CESifo.
    2. Steven Brakman & Harry Garretsen & Tristan Kohl, 2023. "EXITitis in the UK: Gravity Estimates in the Aftermath of Brexit," De Economist, Springer, vol. 171(2), pages 185-206, June.

    More about this item

    Keywords

    Scottish independence; Brexit; quantitative trade; gravity; border costs;
    All these keywords.

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