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Small firms north of the Border are more reliant on EU workers than their UK counterparts, creating an acute need in Scotland for a future immigration system that meets the needs of the “real economy”.

New research from the Federation of Small Businesses (FSB) shows 26 per cent of small Scottish employers currently have a member of staff from elsewhere in the EU, with that figure rising to 41 per cent in the Highlands.

By comparison, about one-fifth of UK firms have an EU worker.

If Brexit creates additional barriers to recruiting EU citizens, 37 per cent of small Scottish employers said they would consider reducing their operations, while 19 per cent might close their business.

A further 12 per cent said they could move their business abroad.

Nine out of 10 Scottish firms recruited their EU workers when they were already living in the UK.

The vast majority of small firms – 95 per cent – have no experience of using the UK's points-based immigration system to recruit non-EU workers.

“Smaller Scottish employers don't have the resources of their larger counterparts to navigate complex immigration systems,” said Andy Willox, the FSB's Scottish policy convenor.

“Any future system needs to work for the real economy – and needs to flex to adapt to the needs of all sectors and geographies. It can't just be big businesses that gain access to the skills they need.”

The FSB is also recommending changes to Scotland's skills and education system to try to mitigate the impact of any immigration changes.

According to Willox, small firms “predominantly” recruit non-UK EU citizens because they are the best candidates for the job.