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Firms look to robots, AI to plug U.K. skilled worker shortages

(Bloomberg) -- U.K. businesses are turning to technology such as artificial intelligence and robotics as shortages of skilled workers start to bite.

A report by the Confederation of British Industry published Friday said firms are increasingly looking to such investment, as well as more intangible forms such as upskilling and re-training their existing workforce, as suitable new hires become scarce. Separate data from IHS Markit and the Recruitment and Employment Confederation said the dearth of available staff last month led to quickest rise in starting salaries for three years.

The CBI said that the spending on new technology will bolster business investment relative to its previous forecast, but Brexit uncertainty will keep it weak overall. The business group also predicts that the economy will expand 1.4 percent this year, revised down from a previous forecast of 1.5 percent due to bad weather, and grow 1.3 percent in 2019.

It expects three 25 basis-point increases to the Bank of England interest rate by the end of next year, with the first coming next quarter.

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Robotic arms, manufactured by Kuka AG, perform mock operations on handling contaminated barrels of sludge and debris at the National Nuclear Laboratory Ltd. in Workington, U.K., on Tuesday, Dec. 20, 2016. Sellafield, the 70-year-old home to Europe's largest nuclear site with 10,000 employees and its own rail service and police and fire departments looks its age and will eventually cost at least £90 billion to properly clean up, says Paul Dorfman, honorary senior researcher at the Energy Institute at University College London. Photographer: Matthew Lloyd/Bloomberg

“Momentum is set to remain weak. Households remain under pressure from lackluster wage growth, while businesses are grappling with skill shortages,” said Alpesh Paleja, principal economist at the CBI. “While many companies are turning their attention to AI, automation and streamlining operations to stay competitive, there is only so much that they can do when Brexit uncertainty continues to loom large.”

Staff shortages are proving a major challenge to recruiters and becoming business critical in key sectors such as nursing, engineering, manufacturing and IT, according to the REC report. Growth in demand for staff strengthened to a six-month high in May, it said.