SCOTLAND has one of the best performing economies of the UK with wages and productivity outstripping every other area outside the south-east of England, a leading international think-tank has found.

The latest UK economic survey by the Organisation for Economic Co-operation and Development (OECD) shows that Scotland has the third highest household income in the UK and EU immigration has fuelled a rise in productivity.

It also found that Edinburgh and Glasgow only lag behind London in the economic performances of all major UK cities.But the OECD is projecting economic growth of just one per cent next year, saying that the uncertainty of Brexitnegotiations is likely to leave the UK without a free-trade agreement with the EU by its official exit date in 2019.

It warned that Britain's economic prospects could be further hit by a "disorderly Brexit" if negotiations between the EU and UK are cut short.

This will trigger a sharp reaction by financial markets and send the exchange rate to new lows which would lead to a downgrade in the UK's sovereign rating.

But the Paris-based OECD has suggested the UK could dodge those risks through a Brexit reversal.

A second referendum that reverses Brexit would have a "positive" and "significant" impact on the UK economy, which is on track to be crippled by its EU divorce.

The report said: "In case Brexit gets reversed by political decision (change of majority, new referendum, etc), the positive impact on growth would be significant."

"Meantime, however, uncertainty could hamper domestic and foreign investment more than projected and hurt consumption even more were the exchange rate to depreciate further."

"Business investment would seize up, and heightened price pressures would choke off private consumption. The current account deficit could be harder to finance, although its size would likely be reduced."

Brexit has compounded the challenge of reviving labour productivity growth, which the OECD said had come to a "standstill" and made "no meaningful contribution" to UK output since 2007.

The report highlighted that labour productivity was also weakest outside of Greater London and the South East of England with only Scotland faring favourably.

But the kind of disparity between regions and workers "may lead to, or be the result of, important differences among people in terms of income and wealth, jobs and earnings, and education and skills."

"Well-being inequalities may have been one of the causes of Brexit, as less-educated workers in remote regions might have perceived to benefit less from the European project," it added.

Responding to the OECD report, a spokesman for the Treasury said: "Increasing productivity is a key priority for this Government, so that we can build on our record employment levels and improve people's quality of life."

In addition, our reforms to technical education and our ambitious Industrial Strategy will also help to deliver an economy that works for everyone."

Liberal Democrat Deputy Leader and MP for Dunbartonshire East, Jo Swinson said: "This is a significant intervention the government cannot afford to ignore."

Brexit has already caused the UK to slip from top to bottom of the international growth league for major economies.

“This will only get worse if the government succeeds in dragging us out of the single market and customs union, or we end up crashing out of Europe without a deal.

“The case for protecting the economy by reversing Brexit is getting stronger by the day.

“Once the facts are clear at the end of this process, the British people must have the final say with a chance to exit from Brexit.”