YOUNG people should be guaranteed secure jobs for at least two years to help tackle a "potential tsunami" of unemployment, a Scottish Government advisory group has said.

The panel of experts said the damage done to those currently aged between 16 and 25 by the coronavirus crisis "will be a scar across their working lives" unless urgent action is taken.

The proposal is one of 25 recommendations made by the Advisory Group on Economic Recovery, chaired by former Tesco Bank boss Benny Higgins.

Mr Higgins suggested around £6 billion in "stimulus" will be needed for Scotland to recover.

In a new report, the advisory group estimates a 33 per cent fall in Scottish GDP over the months that the current distancing measures are in place.

Nicola Sturgeon said she will respond to the recommendations by the end of July.

Speaking during her daily coronavirus briefing, the First Minister said she is not ruling out the need for the Scottish Government to take stakes in companies to stop them going bust.

The advisory group's report proposes a Scottish Jobs Guarantee to "ensure that no young person is left behind".

It says: "The scheme should offer secure employment, for a period of at least two years, to 16-25 year olds, paid at the Living Wage, with access to training, apprenticeships and the possibility of progression.

"It should be delivered locally, with brokerage of opportunities between employers and jobseekers: but it should be set within a coherent national framework.

"There should be targeted funding support from the Scottish Government to set up the scheme, and to assist small and medium-sized businesses, as well as larger firms, to participate."

The Scottish Jobs Guarantee would be "led by businesses working in partnership with local authorities and other agencies, and with the active support of the Scottish Government".

Mr Higgins said young people need to be prioritised.

He said: "Kids of that age do not deserve to suffer long-term effects, and this is one of the key areas where I think this kind of intervention can make a difference."

Ms Sturgeon said she "couldn't agree more with Benny when he says that we can't allow this generation of young people to bear the long-term legacy" of Covid-19.

Mr Higgins said there needs to be urgent renegotiation of the fiscal framework between the Scottish and UK Governments – the agreement which sets out the funding arrangement north of the border – to allow Scotland to borrow more than its current limit of £450 million in capital spending.

He said: "If Germany needs 4% of its economic output to stimulate the economy, then you'd think that we'd need at least that.

"That's £6bn and the current limit through the fiscal framework is £450m so there's a long way to go from where we are to where we need to be."

The advisory group said there is a "strong case" for the Scottish Government to have greater fiscal autonomy.

Elsewhere, it said the Government "should build its professional capability to manage ownership stakes in private businesses, which are likely to arise out of the crisis".

Ms Sturgeon said ministers will "look positively at whether government intervention, including taking stakes in companies, can help keep productive companies that have a future beyond this crisis from going bust".

Speaking during her daily briefing, she said: "I would point to the interventionist approach that the Scottish Government has already taken over the past few years.

"I can point to BiFab, which still has a long road ahead of it, Prestwick Airport and others where we have been prepared to intervene either with stakes or with innovative financial interventions to try to stop companies going out of business.

"We will be very open-minded to that, but as I am duty-bound to point out, we operate in all of these decisions within certain constraints.

"We operate within the constraints of state aid, we operate within the very important constraint of value for taxpayers' money.

"So there is always a very rigorous assessment that has to be done before we come to decisions like that.

"But we will be open-minded and as inventive and creative as possible as we try to steer our way through this crisis."

Further recommendations made by the advisory group include prioritising a green recovery, investing in digital infrastructure and the targeted use of rates relief, including for the tourism and hospitality sectors.

It also highlighted existing problems in the relationship between the Scottish Government and business leaders, and the "pressing need for a reset".

Its report says: "Although the picture is variable, the feedback, for some sectors and some parts of the business community is that relationships and dialogue need to be improved.

"And it is striking that there is no single strategic forum that brings together the leadership of the Scottish Government and the leadership of Scottish business."

Asked about this during her briefing, Ms Sturgeon said she believed there was a good relationship between ministers and business leaders "but there will always be tensions".

Stuart Patrick, chief executive of Glasgow Chamber of Commerce, said there is an "underlying sense that businesses are treated as, not so much the enemy, but they are treated as institutions about which to be suspicious".

The Fraser of Allander Institute, a leading independent economic research institute based at Strathclyde University, said the advisory group's report made a welcome contribution.

But it added: "That being said, there is little in the report of substantial policy insight that is new, or different to what has gone before."

It said that without a focus on practical next steps, the "risk is that this report is consigned to the shelf like most other well-meaning strategies, recovery plans and policy reports".

Scottish Conservative economy spokesman Maurice Golden said all the indications show "Scotland’s economy was lagging behind before this, and now it seems the impact will be harder here than elsewhere".

He said: “The SNP needs to accept responsibility for that and take action now. Instead, all businesses are getting is far-off promises – which will be far too late for many – and another nationalist attempt at stoking up constitutional division.”

Scottish Labour leader Richard Leonard called on the SNP Government to "waste no more time in establishing a jobs guarantee scheme".

Mr Higgins said Scotland faces an economic challenge of "monumental scale".

He said: "If we do not intervene radically to transform our economy, inequalities will drastically widen with long-term scarring for communities across the country, and for our young people in particular. This cannot be allowed to happen.

“The Advisory Group on Economic Recovery has worked at great speed over the past two months, engaging extensively with businesses and with wider civic society to understand the challenges that we face, but crucially to curate a set of recommendations that emphasise the immediate need to protect and create jobs, reduce inequalities by building a green and technology-led recovery, and make Scotland an attractive place to do business.

“To create a robust, resilient wellbeing economy, the public and private sector must now build a new partnership to prioritise and deliver bold action. And they must do so with purpose and urgency.”

Economy Secretary Fiona Hyslop said: "Scotland, as with other countries, faces enormous challenges, and we need to all work together as never before to ensure our country emerges through this pandemic with a green economic recovery that has inclusion and wellbeing at its heart.

"We wanted the report to be ambitious and far-reaching, and with this strong and comprehensive set of recommendations this has certainly been achieved."

She added: “This report represents a clear call to action that goes beyond the Scottish Government and the public sector. We will only be able to build the kind of post Covid-19 recovery we want with the active involvement of the private, cultural and third sectors and, importantly, the public."