UK firms' optimism levels are up and their intention to hire is "sky high", according to accountancy firm BDO.

BDO's Employment Index reached 113.0 in March, almost nine points higher than the same period last year, and up by 1.1 to 104.9 on a yearly basis (a score above 100 indicates growth). Its Business Trends Report found the intention to hire staff is greater than during the heady days of the mid-2000s.

UK unemployment fell to 1.86 million in the UK in the three months leading to January, according to the Office for National Statistics, leaving the unemployment rate at 5.7%.

However, the report adds that stagnated productivity is a big concern for the UK economy. It says that output per hour by British workers has been static for two years, stating that "such a long period of flat productivity is unprecedented in the period since World War II and the trend is unique amongst advanced economies".

Peter Hemington, a partner at BDO, called on the winners of the election to address the flat productivity. He said: "While it is encouraging to see strong business confidence, the UK's continuing poor labour productivity performance is a very significant concern.

"Although employment growth in recent years has been strong, much of this has been in part-time jobs. Productivity ultimately determines our prosperity so it is a crucial area that must be addressed. Policymakers of all persuasion must take on this productivity puzzle".