Against the backdrop of Brexit, fostering trade relationships between Scotland and other European nations has never been more important, building on mutual ambitions and safeguarding strategic economic growth.
As Scotland’s largest neighbouring trading partner, Ireland provides a unique opportunity to sustain corridors for trade post-Brexit. Maintaining this relationship will be increasingly important for Scottish SMEs. Recognising the importance of international trade is critical for creating new economic opportunities and in turn bolstering the local economy.
Scotland and Ireland are two nations that share much in common. Both rich in history and similar in culture, the two also have a comparable economic makeup, and operate in the same language and time zone. Irish businesses are the fourth largest direct foreign investor in Scotland and since 2012 exports between the two have more than doubled.
With trade between the two nations seeing continued growth, Scottish exports to Ireland in 2017 accounted for nearly £1.5bn*, making it Scotland’s fifth largest export destination. A strong trading relationship between Scotland and Ireland will benefit both nations, mitigating Scotland’s exposure to leaving the EU, and limiting the impact on the Irish economy of an increase in barriers with its largest trading partner, the UK.
The converse is that if the UK economy deteriorates, then a strategic economic partnership between Scotland and Ireland will protect, to a certain extent, against downside exposure.
Sustained uncertainty around Brexit means that Scottish SMEs need to be more creative when attracting foreign investment and exploring opportunities for international trade. Facing a new rulebook will undoubtedly change the way businesses operate, and it is important that Scottish SMEs make the most of the opportunities that are readably accessible across the Irish Sea.
Last month’s trade mission to Ireland, which was co-sponsored by Morton Fraser LLP, is a prime example of where Scottish and Irish business leaders are collaboratively encouraging bi-lateral trade. Events like the inward trade mission offer valuable resources that allows SMEs to expand their reach. Leveraging these opportunities in a post-Brexit world will be vital.
Some industries, including Fintech and Asset Management, have already seen benefits from encouraging bi-lateral trade on both sides of the Irish Sea. The Scottish Irish Finance Initiative (SIFI) was introduced in 2017 to collaboratively grow the finance industries of both countries more effectively. A number of major Scottish firms, including Baillie Gifford and Standard Life Aberdeen, are even setting up Dublin based offices ahead of Brexit to assist with a smooth business transition.
Understanding the opportunities beyond Scottish borders is becoming increasingly complex and navigating the legal system for trade in a post–Brexit world can be overwhelming for an SME. Likewise, regulations surrounding international businesses that wish to trade in the UK post-Brexit are, at the moment, somewhat unclear.
Whilst it is likely that Scottish businesses could face increased trading barriers with the entire block of 27 EU member states in a post-Brexit scenario, they will have sufficient autonomy to build bridges to nations like Ireland. And build bridges, we must.
Businesses and policy makers have a great opportunity to work together across Scotland and Ireland for mutual benefit. Establishing corridors for trade across all markets post-Brexit is critical for businesses to grow, and strengthening current trade relations with Ireland is a fundamental part of creating the conditions for a well-balanced and sustainable economy.
*www2.gov.scot/Resource/0054/00545619.pdf
