BRITISH businesses will struggle to compete overseas because of low skills levels, a business leader said last night.

Bill Midgley, president of the British Chambers of Commerce, said that the productivity gap with France and the US would only get wider unless businesses increased skills among the workforce.

As he gave the Teesside Business School's annual lecture last night, Mr Midgely said businesses had a responsibility to invest more in training to help bridge the 30 per cent productivity gap with France and the US.

He also blamed the North-East's unemployment problems on large companies involved in traditional industries, which he said failed to ensure workers were retrained when they were made redundant.

This, he said, had led to high unemployment in former pit and steel areas, and over the next generation, had led to an "unemployment ethic" in those communities.

Businesses must spend far more than the current £23.5bn per year on training to bring skills up to proper levels, he said. Mr Midgley also stressed the need to retain graduates from the North-East's top universities.