British businesses are positive about the outlook for 2017, with confidence for the year ahead reaching its highest level since the vote to leave the European Union, according to a new survey.

However, concerns remain, with the country’s economic situation and and a tightening labour market casting a pall, according to the poll by the Institute of Directors (IoD).

60 per cent of businesses surveyed were optimistic about their prospects for the next year, compared to only 10 per cent who believed trading would become more difficult.

Read more: Companies' short-term confidence in business output has finally lifted

Headwinds to growth in 2017 include the prospect of skills shortages, with four in 10 businesses citing skills shortages as a potential drag on growth. The unemployment rate stands at 4.8 per cent, its lowest point since well before the financial crisis.

The figures represent a strong improvement from a similar survey carried out in October, which showed more than a fifth of businesses doubting the outlook for their own businesses.

A similar increase has been seen in the broader economic outlook, with a 14 per cent net positive outlook for the UK’s whole economy – a significant improvement from the net negative outlook, at minus 10 per cent, recorded two months ago.

James Sproule, chief economist at the IoD, said: “Politicians must now look to build on this optimism with an ambitious pro-enterprise domestic agenda and a constructive start to our European negotiations.

“Confidence is a funny thing, and it can’t be taken for granted – a misjudged speech or signs that we aren’t making progress in Brussels could signal a sudden downturn,” he added.

The government has yet to outline a detailed negotiating position – despite pressure from both sides of the Channel and from policymakers such as Bank of England governor Mark Carney. However, business confidence has enjoyed a steady upward trend as employers adjust.

Read more: Brexit negotiations uncertainty to lead UK business investment down

Simon Walker, director general of the IoD, said: “Employers are getting on with the job of growing their businesses and delivering jobs for the UK. A steady if unspectacular Autumn Statement has clearly settled nerves, and the early signs of the Industrial Strategy are certainly positive.

The outgoing director general – to be replaced by Stephen Martin in February – also called for the government to alleviate fears of a skills shortage by giving assurances to EU citizens on their status in the UK.

He said: “Business will now look to Government to lay the groundwork for growth, and considering the skills shortage revealed in this survey, they should start by guaranteeing the status of EU citizens currently working for British businesses.”

Walker has previously been strident in his opposition to immigration controls, saying they could harm large parts of British industry.