BILL JAMIESON wonders if we’re surfing through the Brexit storm – or cruising for a bruising?

Prime Minister Theresa May has set her sights on a ‘Hard Brexit’ for the UK and withdrawal from the EU Single Market. Together with her aim to activate Article 50 by the end of next March, sceptics were quick to warn of problems ahead for business and a potential exodus of firms from the UK.

And as if that was not enough, there was an emphatic warning to the SNP administration that there would be no Scottish exception or veto on the Brexit process.  She stressed that the EU referendum had been a UK-wide vote and that “there is no veto for the Scottish Parliament”.

This was a blunt riposte to suggestions by Holyrood’s Europe minister Mike Russell that repeal of the European Communities Act of 1972 would require Scottish Parliament approval.  And that may not be forthcoming if Scotland’s interests are not represented in withdrawal. Under the ‘Sewel convention’ the UK Parliament may not legislate for devolved matters without the consent of the devolved legislature affected. “This Great Repeal Act”, said Russell, “will require the approval of the Scottish parliament – a legislative consent motion will be required. So the Scottish government, the Scottish Parliament has a formal role there”.  Indeed, but ultimately, Westminster can override.

The Scottish government also has a formal duty to secure the best deal in Brexit negotiations for its farming and fisheries industries as well as the manufacturing and financial sectors, so the offer of Scottish representation in the Brexit process is not one to be lightly spurned.

This is particularly the case if, as seems likely, the process proves not be a simple binary choice between ‘hard’ and  ‘soft’ Brexit but is more likely to result in an exploration of the other trade deals and tariff concessions that the EU has reached with outside parties. Spanning amongst others, Norway, Switzerland, Turkey, the Ukraine, Macedonia, South Korea and Canada, these number no less than 42 negotiated arrangements.

Instead, however, the prospect of a bruising war of constitutional attrition between the SNP and Westminster looms large.

And it has overshadowed fresh evidence that the economy for now continues to deny the dire warnings of slowdown and recession.

The September manufacturing Purchasing Managers Index (PMI) out yesterday showed the output component climbing to its highest level since May 2014.

“A serious and very welcome upward surprise”, was the summation of Global Insight economist Howard Archer.

New orders strengthened to an 11-month high, helped by export orders rising to the highest level since January 2014 – boosted by sterling’s sharp weakening. Markit revealed that “UK manufacturers reported improved demand from clients in Asia, Europe, the USA and certain emerging markets.” Domestic demand also improved, led by consumer goods.

Reflecting markedly improved output and orders, employment growth was at an 11-month high in September.

“The fact”, writes Archer, “that the consumer goods sector was particularly strong in September reinforces belief that consumers are playing a key role in the economy’s resilience since June’s Brexit vote.

 “It is also apparent that sterling’s marked weakening is giving an important lift to foreign demand for UK manufactured goods.     

“It is encouraging to see that there was healthy demand for – and production of – investment goods in September, which lifts hopes that UK businesses are still prepared to invest despite the heightened uncertainties since June’s Brexit vote.”

The PMI manufacturing data comes hard on the heels of figures showing the UK services sector grew 0.4 per cent in July, much stronger than expected in the wake of the Brexit vote.

Separately last week, ONS figures showed economic growth accelerated faster than thought in the three months to end June, growing by 0.7 per cent. The second-quarter figures were well up from the 0.4 per cent growth of the previous quarter.

With latest data and surveys largely pointing to resilience in the UK economy, Archer has lifted his estimate of third quarter GDP growth to 0.4 per cent quarter-on-quarter from 0.3 per cent – and the robust September manufacturing survey is supportive to this upgrade.

He is also lifting his estimate of fourth quarter GDP growth to 0.3 per cent, adding that this could well prove to be over-cautious.

So much for the warnings of economic Armageddon.

Previous forecasts are now being devoured in a massive munching of words. And these signs of momentum are all the more welcome given concerns over a slowdown in the pace of growth of world trade.

That said, together with uncertainties over the course of Brexit negotiations, it’s clear a testing period now lies ahead. While the latest fall in sterling should further boost export trade, there is every risk that the economy in Scotland could suffer disproportionately if the SNP administration steps up its defiant war of words over Brexit – an indyref war by proxy. Indeed, this may already have cost Scotland its share of the Brexit “bounce” over the past two months.

There’s much for Scotland to fight for. But how we fight for it to achieve practical, real-life result is now critical.




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