SMALL and medium-sized businesses believe that a lack of skills is one of the main factors limiting recruitment.

A new survey shows that 48 per cent of North-west companies are not taking on staff because the workforce is not sufficiently skilled.

The research was conducted by financial and business advisers Grant Thornton International and economic forecasting consultancy Business Strategies Ltd.

Mr Howard Hackney at Grant Thornton's Liverpool office said: "Given that Labour has pledged to reduce unemployment by 250,000, it is important to know what currently stops North-west entrepreneurs from taking on more staff."

He went on: "One of their main concerns appears to be skills shortages.

"In the region, the problem lies with a lack of technical expertise and an inability to cope with new technology.

"Tackling these issues must be high on the list for the new Government."

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