A leading business group is urging the Government to take urgent action to tackle the shortage of workers, warning that labour supply problems could last up to two years.

The CBI said there is growing evidence of staff shortages, which are continuing to disrupt firms as they battle to recover from the impact of the pandemic.

Director-general Tony Danker said the challenge extends beyond a lack of HGV lorry drivers, which is hitting supplies of goods to supermarkets, pubs and other businesses.

He called on ministers to marry skills policies to roles with the highest unfilled vacancies, add greater flexibility to the apprenticeship levy and use their “immigration levers” to alleviate short-term pressures.

The CBI said standing firm and waiting for shortages to solve themselves is not the way to run an economy.

Mr Danker said labour shortages are biting across the economy, adding: “While the CBI and other economists still predict growth returning to pre-pandemic levels later this year, furlough ending is not the panacea some people think will magically fill labour supply gaps.

“These shortages are already affecting business operations and will have a negative impact on the UK’s economic recovery.

“Other European countries are also experiencing staffing shortages as their economies bounce back.

“In the UK, many overseas workers left during the pandemic, affecting sectors including hospitality, logistics and food processing, and new immigration rules make replacing those who left more complex.

“The Government’s ambition that the UK economy should become more high-skilled and productive is right, but implying that this can be achieved overnight is simply wrong, and a refusal to deploy temporary and targeted interventions to enable economic recovery is self-defeating.

“The CBI has heard from companies actively cutting capacity because they can’t meet demand, like the hoteliers limiting the number of bookable rooms because they don’t have enough housekeeping staff and can’t get linen laundered.

“Meanwhile, some restaurant owners have had to choose between lunchtime and evening services when trying to make the most of summer.

“It’s also visible to consumers when lead-in times for purchases like kitchens or furniture double.

“Employers back existing Government schemes to get people back into work, and businesses are already spending significant amounts on training, but that takes time to yield results, and some members suggest it could take two years rather than a couple of months for labour shortages to be fully eliminated.”

GMB union general secretary Gary Smith said: “We are paying the price for years of cost-cutting and austerity on workers’ pay and conditions.

“Instead of easing the labour market crisis, a furlough cliff-edge risks choking a recovery before it even begins.

“The lessons of the last decade must be learned – you can’t cut your way out of a crisis.

“It’s time to end Britain’s race to the bottom on pay and conditions.”

A Government spokesman said: “We are closely monitoring labour supply and working with sector leaders to understand how we can best ease particular pinch points. Similar challenges are being faced by other countries around the world.

“We want to see employers make long-term investments in the UK domestic workforce instead of relying on labour from abroad. Our Plan for Jobs is helping people across the country retrain, build new skills and get back into work.

“The Government encourages all sectors to make employment more attractive to UK domestic workers through offering training, careers options, wage increases and investment.”