Scotland will have to attract 20,000 new immigrants every year for the next three decades or face a dramatic decline in the country’s prosperity, according to a government-funded report.

The study, by the influential Fraser of Allander Institute, predicts that unless action is taken Scotland’s working age population will slump 14% by 2040.

It warns that failing to make up the shortfall through foreign labour would seriously damage the Scottish economy, leading to a 9% fall in employment and 8% cut in gross domestic product.

Economists have warned that the rapid decline in population would harm Scotland’s competitiveness and its ability to attract investment. They predict that the construction and fishing industries would be worst affected.

According to the study, Scotland’s rising birth rate would be insufficient to arrest the decline. The influx of foreign workers, mainly from Poland, has already started to slow and will decline further over the coming years, the report says.

Last year 26,000 more people came to Scotland than left, but economists predict that net migration will fall to about 8,000 over the next five years.

Thousands of Poles have already returned home as the economy and job opportunities in Poland have improved.

The soaring value of the euro against sterling means Scottish wages are now less attractive, and other prosperous European Union countries, including the Netherlands, have relaxed their labour market laws to welcome Poles since last year.

“As the working age population starts to fall then the labour market starts to tighten, the economy becomes less competitive, particularly vis-a-vis the rest of the UK, which is important for Scotland,” said Kim Swales, professor of economics at Strathclyde University and co-author of the report. “Migration will drive what happens to the economy in the next 20 or 30 years.

“It would be very wrong to assume that the current level of migration is going to be maintained. It seems very unlikely that will be the case.

“This has been a concern in Scotland for the past four or five years and was identified by the previous administration as a major problem.

“It’s difficult to know how effective government initiatives are going to be in the long run. There may be tension between Scotland and the rest of the UK.”

Earlier this year Alex Salmond, the first minister, called for Scotland to be given greater control over immigration policy to make the country more attractive to foreign workers and fill key skills shortages.

Leading economists have also recommended the introduction of a points-based immigration system that takes into account Scotland’s demographic and economic needs.

Such a measure is supported by Trevor Phillips, chairman of the Equality and Human Rights Commission, who said the system should be “tilted” to help the Scottish economy.

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