Skills gap and policy delay may ruin firms, says British Chambers of Commerce chief • Businesses are floundering while Whitehall dithers

British companies are facing a recruitment crisis, with labour shortages hitting critical levels in some sectors, according to a business leader who has urged the government to produce details on a post-Brexit immigration system.

Adam Marshall, the director general of the British Chambers of Commerce, said the lack of candidates for some jobs was biting hard, and he warned ministers against bringing forward a “draconian and damaging” visa or work permit system.

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Surveys by the BCC showed that nearly three-quarters of firms trying to recruit had been experiencing difficulties “at or near the highest levels since [BCC] records began over 25 years ago”, he said.

In an article published in the Guardian, Marshall said the failure of ministers to act swiftly could force companies out of operation. “The simple fact is that many businesses can’t afford to wait much longer for a clear UK immigration policy to emerge,” he said, pointing to further delays to the government’s immigration white paper, an early draft of which was leaked to the Guardian.

Meanwhile, a spokesman for Angela Merkel has called for details on British demands after Brexit ahead of a meeting with Theresa May on Friday.

The prime minister will go to Berlin for a bilateral session with Merkel, the German chancellor, which is expected to cover security cooperation and trading relationships. May is then due to give the next speech in the government’s “road to Brexit” series in Munich on Saturday.

Merkel’s spokesman said the EU27 wanted a close and deep relationship with the UK, but added: “It is important for us for Britain to make concrete its ideas.”

The moves by May and senior ministers to flesh out more details over the next fortnight, with a series of speeches and cabinet away-days at Chequers, has led to a spike in pressure for different outcomes after Brexit.

Following Boris Johnson’s speech this week arguing that Brexit ought to be seen as a liberal project, the prime minister will focus on security cooperation on Saturday.

Facebook Twitter Pinterest Germany’s chancellor Angela Merkel, left, with the British prime minister, Theresa May, last June at an EU leaders’ summit in Brussels. Photograph: Emmanuel Dunand/AFP/Getty Images

The former Liberal Democrat leader Menzies Campbell, who is the party’s spokesman on defence, called on May to soften her stance on the jurisdiction of the European court of justice to help Britain keep access to vital crime-fighting tools. “We have a strong history of working closely with our friends and allies for our common security. It would be foolish to distance ourselves from that legacy,” he said.

Meanwhile, others have set out ideas for economic cooperation after Brexit. Speeches by David Davis and Liam Fox are expected next week on regulatory standards and Britain’s trading prospects.

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The Institute for Directors, in a report, has called for a partial customs union covering industrial goods and processed agricultural products to help maintain competitiveness in key industries, while allowing the government to keep its red line of independent trade policy.

The organisation, which believes Britain could forge an ambitious, bespoke, relationship with the EU, suggested a system similar in scope to Turkey’s agreement with the bloc – a hybrid option that would act as a compromise.

In his article for the Guardian, Marshall stressed the tight timeline for preparing for Brexit. Focusing on immigration and skills gaps, the BCC director general said: “If ministers wish to avoid the sight of unfinished urban buildings, fruit rotting on Herefordshire trees, care homes and hotels shutting their doors from Bournemouth to Inverness, or manufacturers investing in their overseas operations instead of here at home, the time to act is now.”

He said the looming crisis had been driven by record employment of British workers, and falls in immigration since 2016’s referendum vote, and was particularly visible in business parks, industrial estates, construction projects and farms.

Marshall challenged the “oft repeated myths” about business making the case for immigration so as to recruit cheap labour from abroad. “Our research clearly shows that a tiny percentage of businesses consciously recruit outside the UK for reasons of cost.” He insisted companies wanted to try to address skills shortages locally, insisting that they had to “hold up our side of the deal” by showing commitment to training and investment.

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He said businesses accepted that there would be a new system for European citizens. But he said those labour shortages would not ease if the government decided to expand the “loathed and expensive” immigration system for non-EU countries into Europe.

This week parliament’s home affairs select committee warned that delays to the immigration white paper were increasing anxiety for EU citizens and uncertainty for business.

However, the Home Office said plans were on track for a “digital, streamlined and user-friendly” system, and said May had outlined plans for a settled status scheme for EU citizens. A Whitehall source told the Guardian that the needs of business would be seen as a key priority under any new system.