Confidence among small businesses slumped to a four-year low in the run-up to the UK's Brexit vote, according to a report.

The Federation of Small Businesses (FSB) said its quarterly Small Businesses Index also recorded the largest annual drop in confidence since the survey started in 2010 as entrepreneurs outlined plans to cut jobs and slash investment amid economic uncertainty ahead of the vote.

Business confidence plunged to a mark of 4.3 – its lowest level since the end of 2012 – down from 37.9 in the same period last year, according to the survey, which was conducted between 21 April and 9 May.

The survey also found that only 12.2% of small firms were planning new capital investment in the next 12 months, compared to 31.9% a year ago.

FSB national chairman Mike Cherry said: "Even before the EU referendum result, our members were reporting tough business conditions right across the country.

"For the first time since 2009, the UK economy faces a real chance of a recession. To head this off, we need to do everything we can to support small firms to grow, create jobs, and weather the harsh economic headwinds."

Cherry added this must include making sure small businesses are considered when the Low Pay Commission makes its recommendations for setting next year's National Living Wage, ensuring they can "sustainably support higher wages at this challenging time".

Over the weekend, UK Chancellor George Osborne outlined an ambitious plan to build a "super-competitive economy" as Britain exits the European Union. His measures, among others, includes slashing the country's corporation tax to 15%, one of the lowest in any major economy.