CIPFA Scotland predicts Brexit negative impact on public spending

23rd August 2017

In a submission made to the Scottish Parliament, The Chartered Institute of Public Finance and Accounting (CIPFA) Scotland predicts that Brexit will likely have a negative impact on public spending power and therefore it is of critical importance that the Scottish Government start preparing plans for public services post-Brexit.

In its submission, CIPFA Scotland has summarised factors which will impact upon the Scottish budget. The Institute highlights that public services may experience volatility in tax revenue due to Brexit impacts on economic growth and potential constraints on immigration. If combined with a share of the Brexit Bill and a loss in current EU funding levels, Scottish public spending power could reduce.

CIPFA Scotland argues that the Scottish Government should consider the impact during its budgeting process to ensure the financial resilience of public finances is not undermined during the Brexit negotiation process and once the UK has left the EU. CIPFA Scotland also recommends that the Scottish Government should seek to understand how policy and tax measures could help services overcome any loss in income.

Head of CIPFA Scotland, Don Peebles commented on the submission:"Scottish public spending power is significantly vulnerable to the impacts of Brexit. As it is likely that many of the fiscal risks predicted will be realised in future years, the Scottish Government must begin to budget for Brexit so that it will be in the best position to sustain any financial shocks.

"Considering the impact of Brexit may be keenly felt in Scotland, it is important that the Scottish Government has an influence on the negotiations to ensure any Brexit deal works for its public services."

To help guide the Scottish Government and negotiators, CIPFA's Brexit Advisory Commission for Public Services, comprised of public service leaders, academics and economists, will be evaluating the finance and policy implications for public services in the UK.

The Commission will release analysis later this year which will include recommendations on how best EU funding could be replaced to bridge divides in regional inequalities between devolved nations.