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FSB: Confidence high but skills shortage a concern for small firms

POSTED: 1st July 2014
IN: Business news
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Confidence among smaller firms is at an all-time high, but these companies continue to harbour concerns about the growing talent shortage in the UK, according to research.

Confidence among smaller firms is at an all-time high, but these companies continue to harbour concerns about the growing talent shortage in the UK, according to research. undefined

Almost one in three (30 per cent) respondents to a survey by the Federation of Small Businesses (FSB) said the skills gap is a barrier to growth, with those in the construction and computer services sectors particularly aware of this issue.

The FSB recommended a number of steps to address the problem, the first of which is to promote closer cooperation between the business and education communities to ensure young people are ready to enter the world of work.

Reforms must be introduced to create a "business-led, high-quality apprenticeship system", while traineeships should be used as a genuine alternative to apprenticeships, according to the lobbying group.

In spite of their worries about the skills shortage, small firms are feeling very positive going into the summer, with the research showing year-on-year increases in confidence throughout the UK.

London and the south-east are leading the way, while other regions, such as the north-west, are slightly less optimistic in their outlook.

In terms of sectors, professional services and technology remain the most confident, while manufacturing has also benefited from positive developments recently.

Overall, the FSB's Small Business Index now stands at 39.7, surpassing the previous score of 35.7 for the first quarter of 2014.

Looking at the wider picture, John Allan, the federation's national chairman, said skills shortages will present a problem for businesses as the labour market continues to tighten.

He added: "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.

"Despite the emergence of a skills shortage, these results show small firms are still feeling very confident, with every intention to invest and grow. This will provide further momentum to the recovery, especially in terms of jobs growth."

In a separate report, the FSB revealed that smaller businesses are set to provide a "dramatic boost" for the jobs market this summer, with many companies planning to take on more staff.

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