Derek Mackay

This contraction follows relatively robust growth (0.6 per cent) in the first quarter in 2019, which was supported by a notable acceleration in manufacturing sector output as firms stockpiled and moved to complete orders prior to the original Brexit deadline.

Compared to the same quarter last year, Scotland’s GDP grew by 0.7 per cent. Since the start of 2019, growth has been in line with the UK.

Economy Secretary Derek Mackay said: “Given the repeated warnings from business organisations and the contraction across the UK in the same quarter, it is unsurprising, but deeply frustrating that we are now seeing the Brexit impact on the Scottish economy. The responsibility for this contraction lies entirely with the UK Government.

“There can now be no doubt that any form of Brexit will damage our economy and a ‘no deal’ Brexit would be disastrous for Scotland and could push the country into recession.

“Scotland did not vote for Brexit, but our economy is paying the price for it and we are likely to see continued volatility as businesses try and prepare for the looming October Brexit deadline and the increasing thread of a ‘no-deal’ exit.

“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.”

Andrew Mcrae, FSB Scotland policy chair, said: “Across the country, firms are either pouring resources into Brexit planning or postponing critical decisions until our political leaders get their act together. That means that they’re not using every tool at their disposal to create jobs and drive growth.

“The small business priority is to avoid a no-deal, no-transition Brexit in just a few short weeks. Where possible, every business leader needs to take action to mitigate the risk of this chaotic outcome. But there’s no way such a scenario wouldn’t squeeze many operators. It must be avoided.

“North of the border, Holyrood decision-makers need to take note of the storm clouds on the horizon.”