A no-deal Brexit could plunge Scotland into a deep recession, Constitutional Relations Secretary Michael Russell has said.

Speaking at the Scottish Parliament on Wednesday, Mr Russell suggested leaving the European Union without a deal would raise the possibility of the country facing a “significant economic shock”.

The Cabinet Secretary said Prime Minister Theresa May must seek an extension to Article 50 and take formal, legal steps to rule out a no-deal Brexit scenario.

“A no-deal Brexit has the potential to generate a significant economic shock which could tip the Scottish economy into recession and potentially into a deep recession,” Mr Russell said.

“It would also have a severe impact on the labour market, resulting in potential job losses, business relocations and closures, underemployment and a reduction in recruitment.

“The SME (small and medium-sized enterprises) sector is likely to be the worst hit.

“Alongside the UK Government, we’re trying to rectify that and we would support measures to ensure there is increased liquidity in the banking system should it be required.

“As part of our support for business, the Prepare for Brexit campaign offers practical advice which can help to safeguard, as much as possible in these circumstances, a company’s own growth and that of the Scottish economy.

“You don’t have to be exporting to the EU – every business is going to be affected if there is a no deal”.

Mr Russell also said businesses must be told they have an obligation to understand the impact of a no-deal Brexit, recommending they consult a new website set up by the Scottish Government which offers advice on exiting the EU.

Scottish Conservative MSP Adam Tomkins said although he agreed with the Cabinet Secretary on the dangers of a no-deal Brexit, he suggested the Scottish Government was being hypocritical for not backing the Prime Minister’s deal.

“Only in the through the looking glass world of nationalist double-speak could we have condemnation of a no-deal Brexit coupled with condemnation of the only deal on the table that would avoid a no-deal Brexit,” he said.

“I do not support a no-deal Brexit and I cannot foresee the circumstances in which I would do so.

“The Prime Minister has opened all-party talks on seeking a solution that avoids a no-deal Brexit and that can command majority support in the House of Commons and the agreement of the European Union”.

Scottish Labour MSP Neil Findlay said: “As Brexit approaches, the anxiety of businesses and people in industry and workers grows.

“We’ve all tried our best to speak sense to the Prime Minister but she’s engaged in a 40-year Tory civil war over Europe, uninterested in who gets caught up in the fallout.”