Nearly a quarter of mid-sized businesses in the North West (22%) say difficulties recruiting and retaining people with the right skills is one of the biggest barriers to growth over the next six months, according to the latest research from accountancy and advisory firm BDO.

Despite the government figures published this week which show unemployment levels unexpectedly fell to 4.9%, the bi-monthly survey of 500 mid-sized businesses has revealed that skills gaps are prevalent in other areas of the UK, with more than a third (37%) of businesses in the Midlands citing skills shortages as a key constraint on growth. Other regions struggling include the South West and Yorkshire, where a third of firms highlighted this as a barrier to growth, underlining the widespread nature of the issue across England’s regional economies.

Looking across sectors, some of the UK’s most economically significant industries are being hit hardest. Retail (32%), hospitality and leisure (32%) and manufacturing (30%) businesses are all struggling to find and keep staff with the right skills. This comes at a time when businesses are facing significant increases in the cost of hiring as a result of increases to the National Minimum Wage and National Insurance Contributions.

Despite current concerns, many mid-market firms are taking proactive steps to strengthen their future talent pipelines. Research from BDO earlier this year revealed that two in ten mid-sized companies in the North West (21%) plan to invest in apprenticeships in the next 12 months, with the most recent survey showing that three quarters of regional businesses (75%) say they attend careers fairs and similar events to encourage people to apply to their business.

Commenting on the findings, Angela Cross, regional managing partner at BDO in the North West, said: “These figures show just how acute the skills challenge has become for mid-sized businesses in the region, with clear similarities across other regions and sectors.

“Let’s be clear: this is not a new problem for businesses. However, unfortunately it just adds to the wide range of challenges regional companies are currently grappling with, including rising operational costs, a squeeze on margins, and ongoing geopolitical uncertainty as a result of the conflict in the Middle East.

“With mid-sized businesses providing one in three private sector jobs across the UK regions, their contributions to the economy should not be overlooked. It’s vital the government takes a joined-up approach – supporting businesses to meet their immediate workforce needs, while also continuing to invest in training, education and long-term skills development to build resilience and unlock sustainable growth across the UK.”