The shortage of affordable, good quality housing is having an impact on three-quarters of London businesses, according to figures from the CBI and business services company, KPMG, published this week.

The most widespread of these effects - identified by almost half (48%) of London businesses - is higher costs due to upward pressure on wages, whilst 36% of firms said it is impacting on employee morale. Almost a third (30%) are to alter their working hours and methods of working, and 10% said productivity is suffering.

The survey also shows that more than half (53%) of London businesses fear skills shortages during the next six months, with these concerns most significant amongst professional services companies (69% expect problems) followed by energy/manufacturing/construction firms (65%).

The CBI is concerned that the shortage of appropriate housing in London & the South East is exacerbating the skills shortfall by restricting the labour pool available to companies. London's skills needs are expected to come even more sharply into focus as investment for the 2012 Olympic and Paralympic Games begins.

Sir Digby Jones, CBI director-general, said: "This survey shows clearly that the housing shortfall in London and the South East is 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."

However, Ian Barlow, London senior partner at KPMG, said the 2012 Olympics should help address the shortfall in housing.

"The arrival of the Olympic Games to the South East in seven years will definitely act as a catalyst in the development of new affordable housing and will provide a lasting benefit for people and businesses across London," he said.