The improved economic climate in the UK has allowed businesses to expand at a rate not seen since before the recession struck in 2008, with firms in most industries channelling a rising amount of investment into commercial property growth. In turn, this has gone a long way in combatting the issue of unemployment, with the services sector in particular seeing companies initiating mass hiring drives according to a new report by the Confederation of British Industry (CBI).
In a survey of 151 businesses within the consumer and professional services sectors, the business lobby group found that business optimism has reached its highest level since 1998. For the most part, this is due to the continually improving economic situation in the UK, although increased investment from overseas has also played a role in ensuring companies now feel more secure about their financial situations.
Deputy director general of the CBI, Katja Hall, notes that businesses have not solely focused upon expanding their commercial property portfolios – investment has also been used to improve staff training and grow multi-channel offerings.
She says; “With a full year of growth under their belts, service sector firms are more upbeat than they have been for a long time.
“The recovery continues to strengthen with both consumer and business facing firms taking on more staff and investing in training and IT.”
Consumer services firms questioned, including hotels, bars, restaurants and travel and leisure specialists, all experienced a rise in footfall. This meant that sales grew over the past year, leaving levels of business “comfortably above normal” and hinting at further sales growth as the economy continues to strengthen.
Professional services companies, meanwhile, also experienced a rise in business levels, with the result that the majority now feel levels to be above normal for the first time since November 2007. Legal, marketing and accountancy firms have all benefited from business growth in other sectors, meaning they in turn can expand to suit the needs of their growing client portfolios.
Unfortunately, while this all seems very positive at first glance, the CBI’s survey highlighted an issue that has already begun to affect growth in sectors such as manufacturing – a distinct lack of skilled workers to fill vacant positions within growing companies. As businesses continue to struggle to find qualified staff, the CBI believes this will have a massive impact upon their ability to meet consumer demand, possibly with the result that growth could be constrained in the coming year.
While apprenticeships and staff training are of course options still open to UK businesses, a lack of qualified staff able to quickly fill positions could see professional services firms losing contracts and therefore failing to build strong profits.
Ms Hall continues; “A rising number of firms, particularly in business and professional services, are having problems finding the right staff.
“This survey identifies a skills gap as a growing constraint on business expansion in the sector over the year ahead.”
How do you think businesses can combat the issue of skills shortages in the services sector?
