Growth in Scotland’s gross domestic product (GDP) is forecast to slow as a direct result of the EU referendum, according to a revised economic commentary from the University of Strathclyde’s Fraser of Allander Institute.

The institute said the impact of the Brexit vote had forced it to revise down its forecasts for Scottish GDP growth to just 0.9% in 2016, 0.5% in 2017 and 0.7% in 2018.

That’s a downward revision of 0.5% for 2016, 1.4% for 2017 and 1.3% for 2018 compared to its forecast before the EU referendum.

It also predicts that unemployment will rise to 7% in 2017.

The institute said a combination of the sharp fall in the pound — which can help exports by making them less expensive — and the “much anticipated monetary stimulus from the Bank of England” mean that Scotland is likely to avoid a sustained recession with growth in each year of its forecast horizon.

However, it said a short “technical recession” – two consecutive quarters of falling output – is highly possible.

The institute said a prolonged period of economic uncertainty and financial volatility as the terms of the UK’s “exit” from the EU are negotiated is now unavoidable.

“This will carry risks for investment, household incomes and jobs,” said the institute.

Trade and investment prospects will be damaged by the decision to leave the EU, according to the report.

As businesses and investors adjust, the Fraser expects growth to slow.

The institute said the costs of the UK leaving the EU on Scotland’s economy “are likely to be structural and long-lasting, with any benefits at best still undetermined and highly uncertain.”

In the absence of a significant fiscal policy stimulus by the UK Government, Scottish growth is forecast to slow considerably through 2016, 2017 and 2018.

Professor Graeme Roy, Director of the Fraser of Allander Institute, said: “Following the referendum result we predict a significant slowing in the rate of growth in the Scottish economy.

“The combination of economic and policy uncertainty coupled with the longer-term structural consequences for trade and investment from leaving the EU, make the outlook much more pessimistic than before.

“Given Scotland’s fragile economic performance over the past 18 months, the impact of the EU referendum result is exactly what the Scottish economy did not need.

“The top priority has to be retaining access to the Single Market which will help mitigate some of the most damaging effects on investment, trade, productivity and jobs.

“Whether or not this can be achieved without freedom of movement is highly uncertain.”