HALF of firms plan to hire more workers next year, but some jobs could remain unfilled because of skills shortages, a study has said.

A CBI survey of 323 businesses revealed permanent jobs will outstrip temporary work in 2015 as the economy continues to recover.

But the report highlighted fears over skills gaps and worries about new regulations damaging job creation.

It said jobs growth is expected in every region of the UK, with Scotland leading the way, while employment prospects for young people have improved.

The study of firms, employing more than 1.2 million workers, also showed pay is expected to rise in 2015, although at a "cautious" rate.

Katja Hall, CBI deputy director general, said: "Businesses are planning to create jobs as the recovery continues, and more and more of those jobs will be permanent.

"The outlook for young people is also looking brighter as firms look to boost their graduate in-take and expand apprenticeships.

"However, it's a concern the UK's growing skills gap is now seen as the number one workforce threat to the long-term health of its economy.

"Companies and the Government need to work together to find ways to develop skills within the workforce and help employees move into higher skilled and better paid jobs."