LONDON, Dec 12: A shortage of skilled staff is proving the biggest barrier to business in London and half of the capital’s employers are relying on migrant workers to plug the gap, a new survey from the Confederation of British Industry and KPMG, a professional services organisation, said on Tuesday.

According to the CBI website two-thirds of respondents (67pc) said they expect skills shortages to be the biggest obstacle to business growth over the next six months, up from 53 per cent a year ago. Upward pressure on wages - a likely side-effect of the skills shortage and a lack of affordable housing - is the other major concern.

To address the skills gap, businesses are increasingly turning to migrant workers. Half of respondents (48pc) are reliant on staff from other EU countries and 37 per cent on non-EU workers. As well as the job skills they bring, immigrants’ language abilities are cited as valuable by 77 per cent of employers.

Migrants are not a long-term solution to the skills gap, but, worryingly, three out of five employers (59pc) are not confident that a new joint skills project by the government and the Mayor of London will deliver a workforce fit for business purpose. Only 23 per cent believe it will.

Many employers have invested in improving their workforce’s skills: 83 per cent have given employees training for their current job and 67 per cent have sent staff on courses to raise the quality of service they offer. The same proportion has organised leadership or management courses.

CBI Director-General Richard Lambert said: "London is a vibrant and dynamic international city which attracts talented people from across the world to live and to work, yet this survey lays bare the skills shortages which employers are facing.

"In the short term, firms will hire economic migrants to fill the gaps but this is not a sustainable long-term solution. If we are to maintain our pre-eminence we need to instill in our home-grown school-leavers and graduates the skills they need to compete in today's globalising world.

Compared to cities like Tokyo and New York, respondents said London is an attractive international business destination, and is highly rated for its employment opportunities and its cultural life. But it fared badly on work/life balance, public services, and value for money.

It measured up particularly poorly on transport infrastructure, with 75 per cent of respondents saying London was worse than other cities despite acknowledging there have been improvements to the Underground system and the bus network. Almost all employers (85pc) said it is important that Heathrow and Stansted airports get a new runway by 2020.

Business people also said the capital did not compare well on the availability of good quality, affordable housing. The lack of housing is affecting businesses in different ways. Forty-seven per cent say it is driving up costs through higher wages and the same proportion say it is affecting recruitment of new staff. Four in 10 employers (38pc) say it has affected methods of working.

In terms of the business environment, London is well regarded by survey respondents, although three-quarters (78pc) said the compliance costs of regulation have risen over the past six months.