Nicola Sturgeon Brexit adviser pours cold water on her single market plans hours before they are unveiled

One of Nicola Sturgeon’s handpicked Brexit advisers has poured cold water on her proposals to keep Scotland in the EU single market even if the UK leaves, only hours before she unveils them on Tuesday morning.

Charles Grant, who sits on the First Minister’s Standing Council on Europe, said it was “extremely difficult” to see how her plans were legally, politically or technically feasible.

In an interview with the Telegraph, he said Scotland staying in the single market without the rest of the UK would require the complete devolution of business regulation and that “clearly isn’t going to be on the cards in the foreseeable future.”

He said proposals for Scotland to stay in the EU’s customs union, a more limited type of free trade area than the single market, without the rest of the UK would also mean customs checks at the border with England.

Among the other flaws he listed were Spain blocking any special deal and Theresa May being unwilling to sign up to a package of powers that would give Scotland “something like dominion status.”

Scottish Government sources said a report on Scotland’s EU options being unveiled by Ms Sturgeon on Tuesday morning represents the stance of her SNP administration and not the group of experts she assembled, among whom they said there is a “diversity” of views.

It is understood that ideas were “bounced off” Standing Council members, either collectively or individually, but it was alleged the document does not reflect the opinions of the group’s majority. 

Speaking ahead of the publication of the paper, titled Scotland’s Place in Europe, Ms Sturgeon said the plans deserve “full and proper consideration”. Theresa May told her in a phone call on Monday she would look “very seriously” at the proposals.

The First Minister has threatened to stage a second independence referendum unless her demands are met but Downing Street warned her that her stance could undermine Britain’s chances of getting the best Brexit deal and Scotland’s engineering industry said devolving business regulation was “totally impractical”.

Mr Grant is one of 18 academics, businessmen, politicians and European Union experts selected by Ms Sturgeon to sit on her Standing Council. He is director of the Centre for European Reform think tank and his areas of expertise include Brexit and the euro.

He is the third member of the group to go public with his doubts about her single market plan after Lord Kerr of Kinlochard, the Scottish cross-bench peer who wrote the EU’s Article 50 process for a member state to leave, told the BBC he did not think it was possible.

Dr Fabian Zuleeg of the European Policy Centre, another member, has described the proposal as “highly unlikely.” Mr Grant refused to disclose the Standing Council’s internal discussions but said he was willing to discuss his personal views.

He said: “Legally, politically, technically, it’s extremely difficult for Scotland to stay in the single market if the UK as a whole does not, the basic point being that there would have to be one set of business regulations applying to England and another set applying to Scotland. 

“So that would require the devolution of all business regulation matters to Scotland, which clearly isn’t going to be on the cards in the foreseeable future.”

Mr Grant said another problem was that “many or some” of the 27 EU member states are opposed to giving Scotland “special treatment that is different from the rest of the UK”.

“Certainly that would be the view of the Spanish government. They would be very unwilling to see Scotland getting some sort of sweetheart deal whereby somehow it could continue to enjoy the benefits of membership while outside the EU,” he said.

“Mrs May would have to push for it and argue for it to give Scotland some special deal vis-à-vis the EU, and I’m not sure why she would think it was in her interests for this to happen.” 

He said the third issue was how far business regulation could be technically and legally entirely devolved to the Scottish Parliament. The single market involves the free movement of goods, services, investment and people.

However, it is expected that the options paper will also examine whether Scotland could remain in the customs union if the UK leaves. 

This is a more limited version of the single market whereby countries agree to abolish restrictions on mutual trade and set up a common system of tariffs and import quotas for non-members.

But Mr Grant said: “If Britain leaves the EU’s customs union but Scotland somehow tried to stay in it, then the Scottish-English border would be the boundary of the EU’s customs union.

“There would need to be customs checks on the border despite the fact that Scotland would still in theory would still be part of Britain, which would be really weird and very strange.”

Ms Sturgeon has previously warned that leaving the EU single market would cost the economy billions of pounds and up to 80,000 of jobs.

Mrs May told the Commons she had spoken to the First Minister, saying: “I welcome the fact that they have been looking at their priorities. 

“We've been encouraging all the devolved administrations to look at their priorities so that they can be taken into account in the UK negotiations on leaving the European Union.”

But a Downing Street spokesman said: “We want a deal that allows British firms to have maximum access and freedom to operate within and with the single market and we are of the opinion that we will get the best deal for the UK if the UK is unified in its response. That will maximise the impact of our negotiations.”

The Telegraph reported a warning by Professor Michael Keating, one of Scotland’s most eminent constitutional academics, that devolving business regulations would create trade barriers with England as the two systems diverged.

Scottish Engineering, the industry’s trade body, told this newspaper the proposal as “totally impractical” as manufacturers would have to adopt two regulatory systems if they were to continue trading in their largest market, the UK.

Bryan Buchan, the organisation’s chief executive, said: “It would potentially make the tendering process so complicated that customers in the rest of the UK would probably opt for a more local supplier rather than try to accommodate the established Scottish supply chain.”

Adam Tomkins, the Scottish Tories’ constitution spokesman, said: “The SNP is in denial about Brexit and it now appears this view is shared by members of its own Standing Council.

"It very much looks like today's document will join the SNP's independence White Paper as another example of Nationalist ‘impossible’ thinking."

Charles Grant is director of the Centre for European Reform.