Brexit: UK companies can't find people with the right skills to expand, finds new survey

Survey found 86 per cent of manufacturing firms and 59 per cent of service firms are seeking to expand but the majority can’t find the right people

British factory output is on track for its fastest growth since 2014 (Getty)

UK firms want to take on more employees but are struggling to find people with the right skills, a new survey has showed.

The report published on Thursday by the British Chambers of Commerce, found that 86 per cent of UK manufacturing firms and 59 per cent of service firms are seeking to expand but, the majority can’t find the right people leading to a squeeze that threatens to damage the economy.

The news will pile further pressure on Theresa May’s government to reassure businesses that they will have access to the skills they need after Brexit.

Official figures released on Wednesday revealed that EU nationals make up 7 per cent of the UK workforce. The Office for National Statistics said migrant labour was particularly important for the retail, hospitality, public administration and health sectors.

The BCC also highlighted the risk of rising prices. Among manufacturers, 76 per cent said raw materials had become more expensive, up from 65 per cent three months ago. There was also a rise in the number of businesses reporting that other overheads had risen.

Companies have been battling with the impact of a devalued pound which has fallen more than 15 per cent against the dollar and around 10 per cent against the euro since the Brexit vote.

Adam Marshall, BCC director general, said businesses were growing in the short term but the picture is uncertain beyond that.

“The rise in inflation seen since last year's EU referendum is the biggest immediate pressure facing most firms. While manufacturers have enjoyed a good quarter, they are facing higher costs at the factory gates, which increasingly translates into companies having to raise their own prices.”

Mr Marshall said: “Businesses also continue to report recruitment difficulties, and while we’d like to see greater investment in training across the board, without access to a sufficient talent pool, companies are restricted in their development ambitions.”

The BCC said manufacturers reported improved sales and more orders than in previous quarters, helped by increased exports which have been boosted by weaker sterling.

The services sector has partially recovered from its post-referendum slump, but it is still behind its long-term trend, the BCC found.

Suren Thiru, head of economics at the BCC, warned of looming problems, particularly for manufacturers.

“If the sector is to sustain this growth in the long-term, there must be action on the difficulties facing it, including chronic underinvestment in the UK’s infrastructure and shortages in the labour market.”