More than a quarter of UK hauliers are expected to recruit new drivers this year, according to a survey b y accountants Grant Thornton.

But they are likely to find it difficult, with a shortage heightened by the Working Time Directive on hours.

The Directive - now in force - means drivers are restricted to working 56 hours over any seven-day period.

That means the industry will lack some 65,000 people, up from the present 40,000.

Neil Tombs, a partner in Grant Thornton's Birmingham recovery and reorganisation department, said: "On this issue, UK hauliers continue to be between a rock and a hard place.

"On the one hand high costs such as diesel and foreign competitors undercutting prices have put a firm squeeze on profitability; on the other driver shortages are putting a handbreak on expansion. The Working Time Directive will simply make matters worse.

"The industry has had to contend with driver shortages for some time now. Recruiting, training and retaining drivers is no mean feat and the short stop solution has been to look to Eastern Europe. "With demand growing, further recruitment of Eastern European drivers is certainly on the cards."

However the survey revealed a picture of moderate optimism across the industry.

Seven out of ten hauliers expressed greater (24 per cent) or similar levels of optimism (47 per cent) about the industry compared to the previous year, whereas just under a third (29 per cent) felt a greater degree of pessimism.

Respondents also reported good levels of growth on the previous year in business volume terms - 50 per cent more, 32 per cent the same, 18 per cent less - and an equally optimistic expectation for further growth for the year ahead of 49 per cent expecting an increase, 38 per cent similar levels and 13 per cent a decrease.

"In terms of business volumes and values the UK haulage industry offers a better picture of itself this year than the past with the expectation for further moderate improvements during the rest of 2007 into 2008," said Mr Tombs.

"However, margins remain very tight, with the average within the industry slightly south of three per cent."

Hauliers continue to regard diesel costs, regulation, growing traffic congestion and poor road infrastructure as the biggest challenges ahead. Almost seven in ten were also wary of the potential threat of environmental taxation and new congestion charging schemes hitting the industry.

"Growing demand for services tempered by increasing competition and tight margins are certain ingredients for more M&A in the sector," said Mr Tombs.

"Seventeen per cent of respondents confirmed plans to either sell the business, make an acquisition or initiate a merger/joint venture over the next 12 months, with a further 23 per cent considering such an option.

"Many mid-sized operators in particular are struggling to cope on their own and regard consolidation as a way of achieving cost saving, diversification and market share.

"I certainly expect greater consolidation to develop across the sector in the months to come."