SCOTLAND accounted for only three per cent of the value of equity investments in smaller businesses in the UK last year, a report reveals today.

The latest small business finance markets report by the British Business Bank highlights the great degree to which equity finance for smaller businesses remains concentrated in London and south-east England.

These two parts of the UK accounted for a combined 69 per cent of equity investments in smaller firms in the UK by value, and 58 per cent of such deals by number.

Scotland, by number rather than value of equity investments, accounted for six per cent of the total.

The British Business Bank, which describes itself as the UK’s national economic development bank and was established in November 2014, said: “Evidence in this report continues to show that the flow of equity finance, which can be especially important for growing businesses, is not evenly spread across…the UK.”

The survey found that the number of equity investments in UK smaller businesses fell by 17 per cent in 2016, following a record 2015.

Only 37 per cent of UK smaller businesses expect to grow this year. In the previous annual survey, 56 per cent had projected expansion. This fall in confidence was attributed to economic uncertainty.

Meanwhile, the survey signals most of the UK’s smaller firms remain wary about seeking external finance, with 71 per cent indicating they would prefer to grow at a slower rate, rather than borrow to expand faster. The survey also shows the overall volume of lending to UK smaller firms was up, with peer-to-peer business lending and asset finance higher than in previous years.