FEWER than one third of Scottish companies are exporting their goods or services as volatile currency rates disrupt trade.

The number of firms tapping into international markets has plummeted by eight per cent in less than a year, according to research published today by the Bank of Scotland.

The change means just 29 per cent of companies now take their business abroad, compared with 37 per cent last summer.

The dip is deeper than that of the UK as a whole, which has seen a drop of just four points over six months to 40 per cent.

Uncertainty over the exchange rate was cited as the biggest challenge to overseas trade.

It was the largest barrier for one quarter of firms questioned for the Business in Britain report, with only 10 per cent saying tariffs and quotas had done the most to derail their exports and seven per cent citing costs like transportation charges and port entry taxes.

Twenty per cent of companies said the fall in the value of the pound was bad for their business, while 17 per cent said it was bad for the economy as a whole.

One quarter of firms said they would now focus on domestic sales “in light of Brexit”.

Leaked UK Government papers reveal forecasts of an economic hit of between two and eight per cent, depending on the outcome of talks with Brussels.

The estimates suggest London would be less affected by the change than anywhere else, experiencing a much smaller decline of between one and 2.5 per cent.

In contrast, the impact for Scotland is set at between 2.5 per cent and 9.5 per cent, in line with analysis revealed by the Scottish Government last month.

Simon Quin, Scotland area director for global transactional banking at the lender, said the research also found that companies are keen to re-establish international sales, with a net balance of 17 per cent predicting an increase in export orders over the next six months.

China was rated as the market with the biggest potential, followed by the US and Germany.

Quin said: “The majority of Scotland’s exporters still see international trade playing an important role in their plans, despite the continued climate of domestic and international uncertainty.

“Judging from Scottish firms’ export performances over the previous six months, this confidence is not misplaced, and by using internal trade as a growth strategy for their business British firms can also manage risk during periods of uncertainty.”

The pound slipped to less than 1.08 euros in August but climbed to a seven-month high of 1.15 euros at the start of February. It also reached a post-Brexit high of 1.42 against the US dollar at the beginning of the month, rising by almost six per cent within one month.

Quin said optimism about the potential to sell to China suggests decision-makers aim to use the Asian giant to mitigate possible losses from the remaining 27 EU member states when the UK goes it alone.

The EU is the world’s largest trading bloc and Scottish Government figures reveal it accounted for 17 per cent of the nation’s exports in 2016. The sales were worth £12.7 billion during that period. Excluding oil and gas, exports to the rest of the UK were estimated at £45.8bn that year, with the international market worth £17.1bn.

Quin said: “The fact that Scottish exporters see China as offering the biggest opportunity in the future shows that they are looking to preemptively tackle the impact of a potential loss of access to the EU single market.

“With Scottish food and drink in particular enjoying an enviable reputation across the world, and the fact that the fall in the value of the pound makes a lot of British exports more attractive overseas, it’s clear there are opportunities for Scottish exporters.”