The next Government must do more to close the skills gap, business leaders have warned.

The latest labour market figures show UK unemployment fell by 53,000 to 1.54 million in the three months to March, the lowest for 42 years and a jobless rate of 4.6 per cent.

Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), said: "With unemployment continuing to fall and employment levels rising, conditions in the UK labour market remain robust.

"However, labour market indicators often lag behind the wider economy and it remains likely that employment growth will start to soften over the near-term, as more subdued economic conditions and the rising cost of doing business in the UK stifle firms' ability to recruit.

"The BCC's Quarterly Economic Survey shows the proportion of firms reporting recruitment difficulties remains close to a record high, which is undermining their productivity and growth.

"With increases in regular pay slowing again, earnings growth is now comfortably trailing behind inflation. If the disparity between pay and price growth continues to increase as we predict, household spending is likely to slow further, weakening overall economic activity.

"The next Government must do more to close the skills gap, including improving the transition from education to work by guaranteeing universal experience of work in all schools for under 16s, and delivering a future immigration regime based on economic need, rather than an arbitrary migration target.

"This will help firms compete on the global stage, boosting UK productivity and growth."

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