Small firms fear skills shortages will cap growth

SMALL businesses are at their most confident since the UK’s recession, but shortages of skills are beginning to emerge as unemployment plummets, according to a report today.

The Federation of Small Businesses (FSB) figures show that the firms are at their most confident in at least four years, going back to the beginning of the survey in 2010.

However, nearly a third of these small employers are now saying that skills shortages are a significant block against their growth. Three months ago, just over a quarter of respondents shared the same sentiments.

“As the labour market continues to tighten alongside the economic recovery, skills shortages will continue to be an increasing concern for more businesses,” said John Allan, national chairman of the FSB.

“While this helps to boost the wage bargaining power of workers with the right skills, it poses a risk to the momentum of economic growth and once again underlines a long standing structural weakness in the UK economy,” he added.

The UK’s unemployment rate has dropped dramatically, from 7.8 per cent in the three months to April 2013, to 6.6 per cent in the same period this year. As the number of people out of work and looking for employment declines, firms of every size have been reporting increasing difficulties in finding skilled workers.

Investment intentions remain strong, with 25.6 per cent more firms expecting to expand than decrease their capital spending during the next 12 months.

Small businesses in London and the south east are most confident, while those in the north west of England are most bearish about the recovery.

By sector, professional services, technology and manufacturing lead the way.