A lack of skilled staff is the biggest challenge facing business owners looking to expand, according to a new survey.
The poll by venture capital investor Albion Ventures shows that while half of SMEs with more than five employees are planning to increase their headcounts in the next two years, getting the right staff is an increasing challenge, moving from being the third biggest obstacle to growth in 2015 to first.
Skills shortages are most acute in London, followed by the South East and North West.
On a sector basis, SMEs in manufacturing are most concerned about getting the right people, followed by those in technology and telecoms, and construction.
The areas with the biggest skills gaps included marketing, new technology and business planning.
Red tape and regulation, which had been the top challenges last year, moved to second and third place in 2016. Political uncertainty and leaving the EU were fourth and sixth respectively.
Patrick Reeve, managing partner at Albion Ventures, said: "A shortage of skilled staff shows that the growth pressures on the economy are at the most sophisticated end of the scale, which is precisely where we can expect to generate the biggest returns. The economy is coming under capacity constraints at a time of considerable political uncertainty.
"Policymakers charged with deciding our post-Brexit future must recognise that many of the skills that enable us to compete in a fast-changing and increasingly competitive world are in short supply and our best chance of overcoming this challenge is by building on the UK’s first class reputation as a home for global talent."