Brexit fuelled uncertainty has been blamed for the biggest fall in productivity in the last five years.

Latest figures from the Office for National Statistics (ONS) showed that output per hour worked fell 0.5 per cent year-on-year between April and June – the biggest drop since the second quarter of 2014.

The services sector, which accounts for around three quarters of UK economic output, saw a 0.8 per cent fall year-on-year in productivity, while manufacturing suffered a 1.9 per cent drop.

Meanwhile, productivity fell 0.2 per cent quarter-on-quarter, according to the latest ONS figures, following two previous quarters of zero growth.

It comes after years of below-par productivity – leading to the so-called "productivity puzzle" seen in the UK economy since the 2008 financial crisis and following recession.

The ONS’s deputy chief economist Richard Heys, said labour productivity had “continued the weak trajectory it has followed over the last year”.

And experts have firmly laid the blame for the drop on Brexit uncertainty, with heightened concerns the UK leaving the European Union without a ‘deal’ on October 31.

Business investment fell again between April to June – marking declines in five out of the six last quarters – with “damaging implications for productivity” it has been claimed.

Chris Ward, committee member of the Institute of Directors (IoD) Cumbria and IoD North West manufacturing ambassador, blamed post Brexit referendum “stagnation”.

“In the current febrile environment, businesses are unable to make the investments needed to deliver meaningful improvements in productivity, so nobody should be surprised by the figures,” he said.

“The economy is on the back foot as a result of three years of ‘short-termism’ and business is wheezing in an uncertain atmosphere.

“We should be in no doubt that continued obfuscation and delay risks further productivity decline.”

Tej Parikh, chief economist at the IoD nationally, said business leaders would welcome an extraordinary Budget to support productivity increases.

“Cost reliefs and investment incentives are a must in order to give UK productivity a jolt,” he added.

There are also cracks appearing in the wider employment market, with two major recruiters – PageGroup and Robert Walters – issuing warnings over the impact of Brexit on the UK jobs sector.