JUST over a quarter of Scottish businesses have said securing investment has been essential for their survival as “the reality of trading through Brexit hits home”.

New research by law firm Morton Fraser found nearly double the proportion of large firms -35 per cent - said they needed “stop-gap” investment compared to smaller firms, at 18%.

The firm pointed to Brexit preparations as the key reason, but added that potential impact varies across sectors as well as size of business.

It said that “those in survival mode are likely to use funds to protect their businesses from the impact of Brexit” and this ranges from stockpiling to paying for tax and international trade advice.

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Iain Young, partner and head of the corporate growth team at Morton Fraser, said Brexit is likely to affect all businesses.

He said: “The fact that so many companies view investment funds as a stop-gap to plug financial shortcomings is telling. Whether it be bank debt or crowdfunding, private equity support or government grants, businesses are saying they need this support just to endure what is becoming an increasingly precarious trading environment.

“The larger the company, the more preparations are required and the greater the risks associated with a no-deal Brexit. It is therefore no surprise that larger companies have characterised their most recent investments as essential to their survival.”

He also said: “It depends on the industry. We have quite a lot of housebuilding clients and when they are buying plots they tend to take a 10-15-year view, and therefore something like Brexit is obviously of concern to them but it is of less concern to them than a business that is perhaps involved in imports exports and is going to see changes in rules rather more imminently and has to stockpile components and supply them to their customers.”

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Preparations also include building new trade routes, or planning operational change.

Morton Fraser also said a quarter of Scottish businesses are preparing to go to market to seek a further £7.5 billion from investors and banks in the coming two years.

Its study has shown that Scottish businesses will seek out on average £1.3m in support to help them compete in a post-Brexit world.

Large companies with 250 employees or more will seek on average £2.76m, while smaller companies will on average aim to secure £82,600, it said.

Mr Young said: “Investment has long been associated with growth and opportunity.

“Today, many businesses are aiming simply to survive the upheaval of Brexit. Investment has different uses now, and much of those uses are linked to shoring up a business in readiness for leaving the European Union, or to attempt to prosper in spite of its effects.”

Morton Fraser polled 750 financial decision makers in a representative sample of SMEs and large companies across Scotland using Censuswide.

The poll took place online between July 29 and August 9, 2019.