The shortage of affordable housing in the South-East is said to be exacerbating skills shortages in London.

A study by the CBI and KPMG found that three quarters of London businesses felt the shortage of affordable homes was impacting on their business.

The survey also showed that more than half (53%) of businesses surveyed feared skills shortages during the next six months. These concerns were most significant among professional services companies - 69% expect problems - followed by energy/manufacturing/construction firms 65%.

Almost half of businesses surveyed said skills shortages led to upward pressure on wages, whilst 36% felt it impacted on employee morale. Almost a third – 30% - have had to alter their working hours and methods of working, and 10% said productivity was suffering.

Sir Digby Jones, CBI Director-General, said that the survey showed clearly the housing shortfall in London and the South East was impacting not only on key public services, but on the private sector too.

"London's economic success is crucial to the UK as a whole. But inadequate housing supply is pushing up costs and making it more difficult for firms to recruit and retain the staff they need to sustain and grow their businesses. So it is vital that the Government delivers on its pledges to improve the housing supply," he added.

Ian Barlow, London Senior Partner at KPMG, said that long-term reforms were needed to address the housing problem.

"There isn't an overnight solution but the government has made it clear through the Barker Review and the recent Pre-Budget Report that it is also on the top of their agenda and is acted upon however will be crucial to the continued growth of business in the South East," he said.