The shortage of skilled workers in the UK is reaching "critical levels" and a large number of companies are struggling to recruit qualified staff, a business group has warned.

Research by the British Chambers of Commerce (BCC) showed 71% of businesses in the services sector are finding it difficult to hire the right workers - the highest figure on record.

Three-quarters of manufacturing firms that were hiring also had problems finding workers with the right skillset.

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The findings coincide with fears that the economy is already suffering a brain drain amid uncertainty over immigration and trade rules after the UK leaves the European Union.

Official figures released in November showed a leap in the number of EU citizens leaving Britain in the 12 months to June.


But the BCC has suggested that the Brexit vote is only part of a wider issue, as employment levels remain historically high despite a slowdown in investment, recruitment and output.

Director general Dr Adam Marshall said: "While there are many business bright spots across the UK, the evidence from the biggest private business survey in the country shows that growth and confidence remain subdued overall as we enter a new year.

"Labour and skills shortages are set to be the biggest potential drag anchor on business in 2018, since ultimately it is people that make businesses work.

"Business itself must do more, by training and investing wherever possible in people, but Government must also give firms the confidence to put their livelihoods on the line and go for growth.

"This must be the year employers act rather than just complain on skills, and the year Government delivers clarity, leadership and investment in people and infrastructure. Kick-starting growth, and boosting wages and prosperity for all, depends on this."

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A Government spokesperson said: "This Government is working more closely with employers than ever before to design and deliver a skills system that will help build a country that's fit for the future.

"‎Our first Skills Summit brought together leading businesses such as Google and Rolls Royce to drive a major skills reform, backed by our £500m a year investment in technical education.

"We have one of the most flexible labour markets in the world and our employment rate is at a near historic high - but the world of work is changing, so there is more to do.

"That's why we are creating better, higher paying jobs through our Industrial Strategy and putting more than £20bn into innovative businesses.

"This will support employers and provide them with a new generation of skilled British workers, ready to seize the opportunities of Brexit."

Other findings from the survey included cost pressures remaining a worry for demand in the economy - especially among consumer-facing firms such as retailers.

Suren Thiru, the BCC's head of economics, said: "Looking forward, the UK economy is set to continue on an underwhelming growth trajectory over the near term with uncertainty over the impact of Brexit coupled with high inflation and weak productivity likely to dampen overall economic activity."