Brexit: Call for review of Scotland's economic policies

The Scottish government said access to the single market was "absolutely vital"

An academic think-tank has called on Scotland's political parties to carry out an urgent review of economic policies in the wake of the EU vote.

Two former senior advisers to the Scottish government have authored a paper for the Fraser of Allander economic research institute.

They state that it is "impossible to carry on as normal" after Brexit.

Economy Secretary Keith Brown welcomed the paper, saying access to the single market was "absolutely vital".

He said parties across the political spectrum should re-examine their policies in light of the referendum result, but insisted that "the fundamentals of our strategy are sound".

The report was penned by Graeme Roy, former head of policy for the first minister and now director designate of Fraser of Allander, and Andrew Goudie, who was chief economic adviser to the Scottish government.

The report says it is "impossible" for Scotland to "carry on as normal" following the Brexit vote

They suggest that exports, promotion and incentives for inward investment need to be part of the review.

They suggest bringing forward the creation of overseas trade and investment hubs, as well as planned cuts to Air Passenger Duty, and there is also a call for new measures to encourage recruitment of international students.

The report is aimed mainly at the Scottish government and Holyrood opposition parties, but parts of it are also directed at Westminster.

The £1bn figure for economic development is in addition to spending on education and skills and regeneration.

'So significant'

The reports authors wrote: "All of the government's economic strategy priorities - internationalisation, innovation, investment and inclusive growth - have been turned on their head by the decision to leave the EU.

"It is simply not possible to continue as normal. An urgent review of current policy initiatives is needed.

"Brexit is of a scale so significant that policymakers need to also consider the totality of their approach to economic growth.

"The challenges that we will face - and the opportunities that may arise - will require different policy responses and Scotland needs to be flexible and respond to the new environment.

"It is imperative that everyone - from across the political spectrum - revisits their economic priorities in the light of the referendum. There is a cross-party obligation to understand the shortcomings of existing stances: all require re-direction for the massive challenges that have arrived."

Analysis by Douglas Fraser, BBC Scotland business/economy editor

Those arguing for the UK to leave the European Union were sunnily optimistic about the possibilities that could follow. Having won, they're rather quieter about all that.

Some sectors are already cashing in. This isn't such a bad time to be in public affairs, though it would be more helpful if it were possible to advise clients on what's going on inside government. Even those who are inside don't seem to know.

Lawyers will surely do well, as contracts have to be unravelled. And if you have any experience of negotiating trade deals, Sajid Javid wants to hear from you. He's creating a team of 300 to re-shape Britain's trading relationships, post-Brussels.

There are further opportunities, according to these former government advisers, now at Strathclyde University. Much of what they say is to warn about Brexit implications for current government strategy. It doesn't need to be ripped up and started again, but it does need to be comprehensively reviewed. And opposition parties have to do likewise to their priorities.

The key to the positive end of Brexit is to be "clear and sharp" in economic strategic thinking, say the Fraser of Allander duo. That may require less focus on the constitutional questions.

"If Scotland's political leaders can be quick-footed, there is an opportunity to take advantage of the current uncertainty, move ahead of other parts of the UK and signal that the country is open to business, trade and investment".

In other words, Whitehall's crisis can be Holyrood's opportunity.

The authors question whether the relatively-high level of spending on economic development provides value for money, and why Scotland continues to have a low business start-up rate.

They question whether the removal of 'Brussels red tape' after the Brexit from the EU will mean changes to employment law which could undermine the high priority given in Scotland to reduce inequality, boost worker rights and and fair work contracts and conditions.

They suggest that duplication should be identified and removed. The more efficient programmes should be prioritised along with those that have the best prospects after the UK leaves the EU.

The report is mainly aimed at Scotland's government and opposition parties

While it remains top priority for the economy to retain access to the European single market, the Fraser of Allander paper questions what comes next - a Scottish points-based migration system, the future of employment rights, changes to farm subsidy and what further powers should the Scottish government seek to gain from Westminster as part of the Brexit process.

In recent days, business representatives have met with Scottish government ministers and David Mundell, the Secretary of State for Scotland.

On Friday, he issued a letter to the 'big six' business lobby groups, underlining his emphasis on getting the whole UK to work together on Brexit talks, and intends to meet the first minister next week, after which he has set out hopes for a joint approach to working together with business leaders on post-Brexit plans.

Responding to the paper, Economy Secretary Keith Brown said he hoped "those right across the political spectrum look at their policies in light of the EU referendum result", but insisted that "the fundamentals of our strategy are sound".

He said: "Scotland's economy is fundamentally strong, but continued EU status and our place in the world's biggest single market is absolutely vital when it comes to protecting jobs, investment and long-term-prosperity, which is why we are committed to pursuing every possible avenue to maintain our place in the EU.

"Trade and business continues as normal and we are determined that Scotland will continue now and in the future to be an attractive and a stable place to do business."