The State of the Economy report, published by Scotland's Chief Economist Gary Gillespie, has shown that companies are pausing key investment programmes to focus on immediate Brexit-related spending - including stockpiling, warehousing, logistics, supply chains and alternative trade options.
The report highlights:
• Output growth has strengthened at the start of 2019 and the labour market is delivering record levels of performance
• Brexit uncertainty continues to impact business investment in Scotland, posing a significant risk for future output growth and productivity
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• Consumer sentiment in Scotland continued to weaken at the start of 2019 with households increasingly concerned about the economic outlook
• Independent forecasts for the Scottish economy estimate growth of between 0.8 and 1.2 per cent in 2019, assuming a smooth UK EU Exit transition, with No Deal remaining a key risk which could push the Scottish economy into recession
Commenting on the reports, Economy Secretary Derek Mackay said: "Scotland's economy continues to perform well, with further growth and a record high employment rate. However, our economic stability is seriously threatened by the UK Government's EU exit plans which, in whatever form they take, will damage the Scottish economy.
"As this report highlights, business investment has fallen in Scotland since the EU referendum and investment has lagged well behind the growth of other G7 countries.
"The Scottish Government has been clear and consistent that the best option for the future wellbeing and prosperity of Scotland is to stay in the European Union. Otherwise we will see damage to our economy and the future prospects of the people of Scotland suffering.
"The Scottish Government will continue to do all we can to provide as much reassurance as possible as we face the potential of yet further uncertainty over the UK's EU exit."
