A report from the London Chamber of Commerce and Industry (LCCI) said that, while the capital's economic performance in the third quarter was better than expected, businesses were being squeezed when they tried to recruit staff at a time of record employment levels.

More than 50% of UK firms have difficulty finding employees with the right skills

Meanwhile, research by recruitment firm Robert Half International found that small and medium-sized UK businesses faced a shortage of skilled employees that will cost them on average £145,000 next year.The LCCI survey of more than 500 firms found that about 20% of companies in the capital reported an increase in exports and domestic orders and sales in Q3. But 56% of firms who tried to recruit over the quarter said they had difficulties in finding the skills they needed.Sean McKee, director of policy and public affairs at the LCCI, said, "For the second consecutive quarter the London economy has returned results that are better than some would expect, given the ongoing political turmoil and uncertainty of Brexit."The performance is testament to the resilience of London's firms. However, some of the increased business investment may be as part of Brexit preparation spending, rather than the underlying strength of the economy."One thing that is certain is that a restricted labour market, at near-record employment levels, continues to pose challenges to the capital's firms."Investment in training increased as businesses continued to turn to upskilling existing employees in order to close skills gaps that they are struggling to fill via recruitment. Consequently, an increasing amount of businesses came under pressure to raise wages."

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What is causing the UK's talent and skills shortages?

The Robert Half study of almost a thousand SMEs found that 47% said that “tightening visa controls and Brexit” had exacerbated the skills shortage.Matt Weston, managing director of Robert Half, said, "The nation is gripped by the current skills shortage, an issue compounded by increased digitalisation, tightening visa controls and Brexit, and one that threatens the ability of our nation's SMEs to compete on the global stage."The desired skills remain specialist which means those who possess them are in demand. The resulting war for talent could cause even more headaches for SMEs."The report said that Britain’s workers need to be taught “data analysis and digital skills” to help them cope with changing technology. It also said that “softer skills such as resilience, adaptability to change and critical thinking” should not be ignored.

For more news and views, visit our dedicated Brexit section.

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