Half of firms expect to recruit staff next year, with smaller firms most confident, according to a new study.

A survey of almost 300 companies, employing one million workers, also found that most believed a diverse workforce was important to their future success.

The CBI said its research found that a shortage of skilled workers was the biggest worry for companies, with many worried about being able to attract overseas employees.

Half of the companies questioned said they were aiming to increase pay at least in line with inflation in the coming year, slightly fewer than this time a year ago.

Fewer than one in three said they would be able to absorb the costs of increases in the national living wage, with one in five planning to increase prices or restructure their business.

Neil Carberry, the CBI's managing director for people policy, said: "Britain's record on job creation is second to none, and this year's survey shows that this is set to continue in 2018.

"But with softening economic growth matched with high employment, the survey again emphasises the vital need to make progress on the industrial strategy and secure a good Brexit deal to improve productivity, support job creation and boost pay growth.

"The survey also shows that firms are concerned about finding the right staff in the future and this is damaging the outlook for investment in the longer term."

Tracy Evans of recruitment firm Pertemps, which helped with the survey, added: "Although there has been a lot of change in 2017, confidence is high among employers, with most expecting to expand on opportunities in the coming year.

"One of the big problems we face in recruitment at the moment is the skills gap and how to overcome it. Finding the right staff is obviously key in recruitment and we need to find a solution to this ever-growing problem."