Despite confidence amongst UK SMEs being at an all-time high, the latest data to come from the Federation of Small Businesses has highlighted a growing concern over skills shortages in the workplace.

According to results from the FSB’s Voice of Small Business Index, a quarterly report analysing trends in the SME market, around a third of companies surveyed said skills shortages were hampering their growth. The construction and computer industries came out as the worst affected regarding this issue.

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

“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 response to the findings, the FSB is calling for action to be taken. Collaboration between businesses and the education community, working together to ensure young people are prepared for the world of work and have employability, is one of the suggestions for improvement. Other recommended ways forward include the creation of a quality business-led apprenticeship scheme providing a real choice between vocational and academic routes.

Record high for small business confidence

The survey of 2,500 SMEs across the UK revealed year-on-year gains and strong intentions to invest – leading to a record level of confidence. The strongest sense of optimism is coming from the professional services and technology sectors, particularly the manufacturing industry.

While London and the South East demonstrated the most confidence, levels were shown to be weaker in other parts of the UK such as the North West.