Small companies will be 'disproportionately' hit if tariffs are imposed on European Union imports and exports after Brexit, with one in four prepared to cut their trading ties with the bloc, the Federation of Small Businesses (FSB) has warned.

Nearly two-thirds (63%) of small businesses wanted to remain in the single market when surveyed by the FSB last autumn, before prime minister Theresa May confirmed the UK would pull out to get full immigration control.

More than one in four (27%) exporting small firms would be deterred from trading with the EU if tariffs of any level were introduced as a result, the survey suggests.

This figure rose to one in three if tariffs of between 2% and 4% were implemented – the range of the EU's average applied tariff in recent times, the FSB said.

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FSB regional chairman for East Anglia Salena Dawson said: 'This new FSB research reveals the true small business wish list for future trade deals. Small firms trade with countries based on ease, cost and value and any future trade deal must deliver on these key aspects both with the EU single market and non-EU markets.

She added: 'Compared to larger companies, small businesses typically work to tighter margins with limited resources, meaning changes to the trading landscape will hit them disproportionately hard.

'We call on the government to ensure that a sensible phased implementation arrangement is put in place to avoid a cliff edge, once we have left the EU.'

Of the 1,758 FSB members surveyed in October and November last year, 32% of exporting small firms expected to export less to the EU while 26% expected to export more to non-EU markets.