Despite being a key driver in the UK economy, service sector growth remained “muted.”
The manufacturing sector also struggled with recruitment as 75% of firms said they had difficulty in hiring the right workers, with skilled manual labour being the leading area of recruitment difficulties (68%) – again, the highest since records began.
Both sectors saw increases in the number of businesses expecting prices to increase over the next three months.
BCC director general Dr Adam Marshall said labour and skills shortages were the “biggest potential drag anchor” on businesses in 2018.
In addition to calling on businesses to do more by training and investing in people, Marshall stressed that the government needed to do more to give firms confidence to “put their livelihoods on the line and go for growth”.
“This must be the year employers act – rather than just complain – on skills, and the year the government delivers clarity, leadership and investment in people and infrastructure,” said Marshall.
“Kick-staring growth, and boosting wages and prosperity for all, depends on this.”
Suren Thiru, head of economics at BCC, said the results showed inflation continued to be a concern for businesses, and that it would remain “stubbornly above” the Bank of England’s 2% target.
Thiru added that the UK economy would continue on an “underwhelming growth trajectory” due to Brexit uncertainty and weak productivity dampening overall economic activity.