The unique demographic challenges facing Scotland in the coming decades make the overwhelming case for a regional approach to immigration, according to a discussion paper from the Scottish government.

Calling for the creation of a Scotland-specific visa, the paper underlines the potentially devastating impact of a hard Brexit on immigration, especially in rural areas. Population decline in the Highlands and Islands region has been reversed in the past decade, with EU migrants in particular helping to spur growth.

But Scotland is still facing a significant demographic challenge, with more deaths than births forecast every year for the next 25 years. According to current projections, migration will account for all of Scotland’s population growth up to 2041.

The paper suggests that in a worst-case scenario where UK net immigration is reduced to the tens of thousands, the GDP impact for Scotland could be more than £10bn per year by 2040.

Holyrood’s external affairs minister, Fiona Hyslop, who launched the paper on Wednesday, said: “There is now an overwhelmingly strong case for Scotland to have the power to tailor its own migration policy to reflect its own unique circumstances.”

Westminster’s plans to reduce immigration via targets and by leaving the single market would not support Scotland’s economy or its population needs, she added.

There are an estimated 219,000 EU citizens living in Scotland and an estimated 135,000 other international immigrants, accounting for 7% of Scotland’s population and playing a vital role in the country’s tourism, agriculture and healthcare sectors. Regardless of the final Brexit settlement, long-term international migration to the UK is forecast to decline after the withdrawal from the EU.

The paper reiterates that the Scottish government believes Scotland’s best interests are served by the UK remaining within the single market and continuing to benefit from free movement of people. It goes on to argue for new powers to enable Holyrood to create Scotland-specific policy and systems on immigration.

It calls for limited devolution within the current UK immigration system and suggests the development of Scottish visas. It argues that creating a new international migration route to Scotland could promote long-term settlement and support fragile communities.

Devolved powers could make it easier for immigrants’ family members to join them in Scotland, the paper says. It notes that residence restrictions may be required to prevent migrants from entering Scotland with the intention of relocating elsewhere in the UK.

The paper also calls for the reintroduction of the post-study work visa, which allowed international students to remain in Scotland and work after graduation but which was ended by the UK government in 2012, despite having cross-party support in the Scottish parliament.

Last September a Welsh government paper called for reform of UK immigration policy to recognise the distinct needs of Wales.

