It could take Scotland nearly a decade to get back to peak employment, according to a new economic report.

The Ernst & Young Scottish Item Club said the country had suffered "eye-watering" economic losses with growth forecasts cut.

They say any hope of a rapid recovery is now a "pipe dream," with Scotland facing a "lost decade" of growth, a modest decline in total employment during 2012 followed by sluggish jobs growth until at least 2015.

It says that Scotland is not expected to return to peak employment until the early 2020s as the country, along with much of the developed world, endures a "grinding" recovery,

Dougie Adams, senior economic advisor to the Ernst & Young Scottish Item Club, said: "The economic losses are eye-watering.

"The cumulative loss in GVA (Gross value added - a measure of the value of goods and services) to Scotland since the beginning of the financial crisis amounts to around £40bn. That equates to a £17,000 loss per every household in the country.

"The deterioration in the international environment coupled with continued pressures on household budgets has further dented our expectations for growth in 2012.  Any rapid recovery that makes good on losses in relatively short order looks to be a pipe dream."

The report also said that the drop in output from the pre-recession peak is greater than initially thought.

Mr Adams said: "Scotland's output at the mid-point of this year was around the same size as it was in early 2006.

"The economy could be expected to grow by 10% over five years in normal economic times, which suggests any talk of a 'lost decade' of growth is no longer as fanciful as it once sounded."