By Daniel Hunter

Almost half of London businesses believe the capital is suffering from a skills shortage, according to new research by the CBI and KPMG.

The CBI/KPMG London Business Survey found that 45% of businesses in London feel there is a skills shortage.

Two thirds (66%) of those surveyed said they struggle to recruit highly skilled people, especially in the tech/IT, creative, finance and engineering sectors.

The research also revealed that STEM - science, technology, engineering and maths - skills are in very high demand in the capital. But businesses also listed basic, core skills like numeracy, literacy and people skills and some of the key traits they look for when recruiting.

In an attempt to plug the skills gap, half of London businesses have now teamed up with local schools and colleges. Of those, half are offering work experience to students and 37% are providing careers talks to classes.

The research also showed that London firms are in favour of reforms to the visas system. Fifty-six percent said they'd like to see changes, making it easier to recruit highly skilled workers from abroad. It is the second time this week that this issue has been raised by businesses. Earlier in the week, 150 business leaders signed The Startup Manifesto, which amongst other recommendations, called for a new visas system.

The survey of 115 London firms shows increased optimism about the economy (59%), but it is growing at the slowest pace in a year. About half of respondents (47%) are optimistic about their business prospects over the next six months, with 66% planning to expand their business over the next year - the highest figure recorded since the start of 2014. Nearly two-thirds of firms (62%) aim to increase headcount over the next six months, 10% up on the last quarter, and only 18% plan to reduce headcount, 5% down on the last quarter.

Lucy Haynes, CBI London Director, said:

"Having the right skills to drive the capital’s economy forward is a core ingredient in the recipe for continued success.

"It’s important that businesses seize the opportunity to work with schools and colleges and ensure that London’s students, who will build the capital’s future, are equipped with the skills firms want in their employees. Science, technology, engineering and maths skills are particularly valuable, given that London’s thriving creative and technology sector is set to be a big growth contributor over the next five years.

"To keep the capital internationally competitive, as well as attractive to skilled workers policymakers need to look at further streamlining the visa system. We would also like to see the Mayor take urgent action to free up land for house building, and invest more in the city’s transport infrastructure."

Richard Reid, London Chairman of KPMG, said:

"As we finally move into a period of more sustained growth, many businesses, including our own, face a larger skills deficit and could struggle to find the talent they need to grow and prosper.  Combined with the higher housing and transport costs, the war for talent is getting increasingly complex for employers based in one of the most vibrant but expensive cities in the world.

"London’s businesses are doing more at a grass roots level to work with schools and students to further raise achievement and equip them with the key skills needed for employment.  London already has the best qualified school leavers in England, but we can still do more to address a small core with poor basic numeracy and literacy skills because they are essential to join the workforce.

"Being a global hub and with two out of three London businesses struggling to get the high skilled workers they need in this country, easing the barriers of our complex visa system to ensure we attract the best global talent needed to compete on a world stage is now vital.  Failure to act swiftly on the skills agenda will undoubtedly see London slip in its global reputation as a world class business destination to the highly educated centres of the likes of Shanghai, Singapore and Mumbai."

Do you find it tough to hire highly skilled workers? Do you think the skills shortage is happening outside of the capital? You can email your reactions to

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