The proportion of businesses facing difficulties in recruiting skilled employees has reached its highest for 10 years, according to a  business study.

The latest Business In Britain report from Lloyds Bank found the net balance of companies who said they had experienced problems in recruiting skilled labour in the past six months had gone up to 52 per cent - the highest for a decade - compared with 31 per cent in January.

The report, now in its 25th year, gathers the views of more than 1,500 UK companies, predominantly small to medium-sized businesses, and tracks the overall 'balance' of opinion on a range of important performance and confidence measures, weighing up the percentage of firms that are positive in outlook against those that are negative

The share of firms reporting challenges in recruiting unskilled staff rose to 26 per cent from 14 per cent.

Despite recruiting challenges, the net balance of firms expecting to raise their staffing levels in the next six months increased since January by six points to eight per cent while expectations of higher average pay in the next six months rose only slightly to 16 per cent from 12 per cent.

The same survey found business confidence had risen to an 18-month high of 24 per cent, compared with 12 per cent immediately following the EU referendum vote last year.

Four out of six business sectors have noted higher confidence since January, with the biggest rise seen in sectors primarily driven by UK demand, suggesting that the lift in sentiment is due to more than the competitiveness boost of the weak pound.

Construction now has the highest confidence, with the net balance of firms indicating that they are more positive rising to 31 per cent from 20 percent.

Transport and communications and business and other services also made strong gains.

The two areas that reported a fall in confidence still showed levels well above the lows of last July: manufacturing fell marginally by one point to 27 per cent and hospitality and leisure declined by seven points to 21 per cent.

Tim Hinton, managing director, Mid Markets and SME Banking, at Lloyds, said "Our latest survey, which was conducted during the election campaign, shows an increase in business confidence since our last report at the start of the year.

"Although challenges remain in recruiting both skilled and unskilled labour, businesses are anticipating higher sales, increased profits and staffing levels to rise, which is all very positive for the economy.

"With details of the terms of Britain's exit from the EU still to come, inflation on the rise and general volatility and uncertainty in the economy, the outlook remains mixed at best.

"However businesses have been operating in this environment for some time now and they are taking it in their stride, staying focused on what they can control and on their business."

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