STAFF shortages and supply chain problems are piling pressure on businesses in the wake of Brexit and the pandemic, research has found.

BDO’s latest Rethinking the Economy survey of 500 mid-sized firms in the central south found 53 per cent said the lack of workers from overseas was the biggest issue affecting their businesses.

Nearly a third said stock shortages were significantly affecting their ability to operate at normal levels, while 35 per cent cited new regulations after Brexit.

Steve Hoon, tax partner at BDO in Southampton, said: “While the media spotlight has understandably been shining on the lack of HGV drivers, and the knock-on effect this is having on the supply chain, there are many sectors within the region that are facing their own uphill battle to recruit and retain staff at the moment.

“Covid-19 and Brexit are two of the biggest contributors, but Central South businesses are also experiencing issues at the lower end of the market, where they’re struggling to fill apprenticeship level positions. The lack of available talent and skills in the region is a real cause for concern and businesses are having to think creatively in order to circumnavigate this growing issue – whether that’s through enhanced incentives, offering permanent remote or hybrid working, or introducing new recruitment strategies.”

On top of the shortage of overseas workers, the survey found 30 per cent of mid-sized businesses said the lack of available talent in the region was fuelling the problem.

All those surveyed said they intended to reduce their product lines or services to help manage staff shortages, while 47 per cent had already done so.

Many believed the reduction in services would be a temporary measure, with 40 per cent planning to change key parts of the way they work in order to attract candidates.

Despite these problems, the survey found companies in the central south were optimistic about the rate of recovery, with 40 per cent saying it would take less than 12 months for the business to return to pre-pandemic revenues.

Key business priorities were managing domestic supply chains (43 per cent), growing revenues (37 per cent) and making loan repayments (37 per cent).

Mr Hoon added: “It’s reassuring to see that regional businesses are keeping a firm eye on recovery, despite the considerable challenges being posed throughout the supply chain. The adoption of a more confident and forward-looking approach is clearly boosting the investment intentions of businesses, with the vast majority of regional leaders actively seeking additional capital over the next 12 to 18 months – half of which will be used to fund mergers and acquisitions. That appetite and ambition will be crucial for businesses as we navigate what will almost certainly be a difficult few months ahead.”