SMALL firms would be hit disproportionately by a “disorderly” no-deal Brexit, a business organisation has warned as it publishes research revealing most of these enterprises fear trade will be damaged by having to make any additional customs declarations.

The Federation of Small Businesses, sounding the warning about the detrimental impact, declared that a transition period was “vital” so firms could “operate broadly as they do now until December 31, 2020.”

Its research found 59 per cent of UK small businesses which export goods to countries in the European customs union feel trade will be impacted if overall costs increase as a result of having to complete additional customs declarations. And 11% of smaller firms say they would stop exporting to the European Union.

Fears of a hard Brexit have grown in recent weeks amid a continuing lack of progress by the UK Government on negotiations with the EU and deepening divisions over Europe in the Conservative Party.

FSB national policy chairman Martin McTague said: “Eight months is all we have left on the Brexit clock, and time is running out to seal a deal that will avoid a disorderly ‘no-deal’ exit. Smaller businesses, and those businesses they rely upon, simply don’t have enough time to prepare for a cliff-edge Brexit. It cannot be forgotten that smaller firms, unlike bigger businesses, do not have the capacity or resources to make adequate contingency plans to soften the impact of this scenario.”

He added: “What will happen to the settled status scheme if there is no deal? How will a small deli survive if they are faced with large tariff increases on food imported from the EU? What support will be available for a self-employed consultant if they lose the right to move freely between the UK and EU?

“The Government must think carefully about the very real consequences of a disorderly Brexit and do everything in its power to avoid this scenario.”