SCOTLAND could lose out on almost £2 billion in business investment next year, according to the country’s chief economist.

In the Scottish Government’s quarterly State of the Economy Report, Gary Gillespie predicts a loss of investment in the country should uncertainty around the UK’s exit from the EU persist into the early part of next year.

The report compared the level of business investment expected without the lack of clarity caused by Brexit with new forecasts of how the landscape could look if negotiations with the EU continue.

Forecasts up to April 2020 show £500 million of investment could be wiped out if uncertainty continues. Another drop of £500m is predicted in the second quarter of 2020, with subsequent quarters experiencing falls of £450m and £400m respectively.

The analysis looked at the impact felt by businesses until the end of the 2020, which shows almost £2bn less than forecast if there was no Brexit uncertainty.

The report said: “The results show that the additional impact of this prolonged period of uncertainty is estimated to have reduced or deferred the level of business investment in Scotland by a further £500m by the start of 2020-21 than previously estimated.”

The report also claimed a No-Deal Brexit would pose a risk of “recession with a corresponding sharp rise in unemployment”.

Finance Secretary Derek Mackay said: “Following the publication of GDP figures this week, this report is another warning of the worrying impact that Brexit uncertainty is already having on the Scottish economy and the risks it presents for the future.

“There is no doubt that any form of Brexit will damage our economy and a No Deal would be disastrous for Scotland and could push the country into recession.

“A No-Deal Brexit is completely unnecessary but seems to be the outcome the UK Government is now actively pursuing.”

He added: “We are already taking steps to protect jobs and our economy from Brexit but not every impact can be mitigated. We will continue to stand firm against efforts to take us out of the EU against our will.”