SCOTLAND’S reliance on employees from other countries in the European Economic Area has been highlighted by PricewaterhouseCoopers in its latest outlook report, amid continuing uncertainty over future immigration policy as Brexit looms.

The accountancy firm meanwhile projects far-below-trend growth in Scotland and UK-wide for 2017 as a whole and 2018.

PwC highlights the fact that Scotland, when compared with London, the rest of England, Northern Ireland and Wales, has the second-highest proportion of workers born in other countries in the EEA, which includes the European Union nations as well as Iceland, Liechtenstein and Norway.

Workers born in other EEA countries accounted for eight per cent of the workforce in Scotland in 2016, up from three per cent in 2004.

Only London is ahead of Scotland in terms of the proportion of the workforce from other EEA countries. About 14 per cent of the UK capital’s workforce in 2016 was made up of people born elsewhere in the EEA, up from seven per cent in 2004.

PwC predicts Scottish economic growth will be 1.3 per cent this year, and 1.2 per cent in 2018.

The Scottish economy, which has been weighed down by the oil and gas sector downturn, grew by just 0.4 per cent in 2016.

PwC projects UK economic growth will slow from 1.8 per cent in 2016 to 1.5 per cent this year and then to 1.4 per cent in 2018.

It highlights weaker consumer spending growth, arising from higher inflation and modest nominal pay increases.

PwC’s report observes the sectors in the UK that are most reliant on workers from other EEA countries include food manufacturing, construction, hotels and restaurants, and warehousing.

The report notes that, in 2016, around one-quarter of workers from other EEA countries in the UK were identified as high-skilled, including critical workers in sectors such as medicine, academia, technology, financial and professional services, and the arts.

PwC highlighted the fact that lower-skilled migrant workers also make important contributions in many industry sectors.

It cautioned that future restriction of migration from other European Union countries could disproportionately impact some sectors of the economy and some parts of the UK.

John Hawksworth, chief economist at PwC, said: “Curbing recruitment of high-skilled workers from the EEA could have particularly negative implications for longer-term productivity and the UK’s international competitiveness.

“It is true that there could be potential benefits of lower EU migration in terms of reduced pressure on transport systems, housing and key public services such as health and education, but these could be more than offset by the loss of skilled EU workers in these sectors if the post-Brexit policy regime is not calibrated correctly.”

David Brown, head of government and public services for PwC in Scotland, highlighted a need for government and business to work together to fill skills gaps if there were reduced migration of workers from other EU countries to the UK. And he emphasised the importance of retaining people from other EU countries who are already in the UK workforce.

He said: “The impact of Brexit on immigration from the EU will not be known for some time, but if numbers are reduced then government and businesses will need to work together to try and fill skills gaps.

“While enhanced training of UK nationals and automation might be a solution in certain sectors if we look 10 to 20 years ahead, realistically they are unlikely to make up fully if there is any large reduction in EU migrant workers over the next five to 10 years.”

Mr Brown added: “Healthcare, hospitality, retail and construction are particularly dependent on EU workers.

“It is important that not only do we take steps to retain the EU migrants already living in the UK, but we also consider carefully how to make provision for them in the new immigration system post-2021.”