BUSINESS optimism and output have fallen to a three-year low in Scotland, according to a new report.
Employers' hiring intentions are also at a two-year low, the June business trends report by accountants and advisers BDO LLP found.
READ MORE: Boeing to double UK workforce in long-term Government partnership
Report authors said that while uncertainty created by the UK's EU referendum vote had disrupted investment, the figures have been in decline for a year "indicating more deep-rooted problems with the economy".
BDO said business output, which reflects companies' experience of orders for the three months ahead, now sits at 99, down from 104.1 in June last year.
Business optimism, which predicts growth six months ahead, fell to 98.9 from 103.9 in the same period last year.
Meanwhile, the report found that uncertainty has contributed to the slowing rate of job creation.
BDO's employment index, which looks at firms' intentions to hire, has now dropped to 101.4 from 109.1 a year ago.
Martin Gill, the Scottish head of BDO LLP, said: "There is little doubt that uncertainty prompted by Brexit has resulted in disrupted investment in the Scottish economy, but the signs of a slowdown were already showing ahead of the decision.
READ MORE: Boeing to double UK workforce in long-term Government partnership
"The latest output and optimism figures are down considerably on June 2015 when the EU referendum wasn't even on the agenda.
"The issue for business, therefore, is that the Scottish, and UK economies, were already facing difficulties even without the Brexit vote.
"These difficulties have, in all likelihood, been compounded by the vote leaving the economy in a very fragile state indeed.
"Of course negativity breeds negativity and businesses need to keep their heads and understand that while the situation at the moment is unclear, they are unlikely to notice any difference in their day-to-day operations for some considerable time to come. "
BDO has suggested three steps which could be taken by government to "stabilise" the economy in the wake of the Brexit vote.
They are: encouraging prosperity in the manufacturing regions; acting to solve the "productivity puzzle" which means that the growing workforce is not increasing productivity; and injecting more cash into the economy to lower borrowing costs further and encourage businesses to invest.
READ MORE: Boeing to double UK workforce in long-term Government partnership
Mr Gill added: "Continued investment is essential as is growth if the Scottish economy is to come through this relatively unscathed. We are at a crucial moment where we must be sensible in protecting the UK economy. We need a plan of action now that gives businesses the added confidence to progress with investment plans."
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article