The latest survey conducted by the Federation of Master Builders (FMB) has indicated that small to medium sized enterprises in the construction sector are set for a fourth year workload reductions.
Respondents of the survey indicated a third of companies expect to make further cuts to staffing levels as a result of the increase of VAT. It is claimed this could account for an estimated 7500 construction jobs.
The survey showed that the final quarter of 2010 was the 12th consecutive quarter where the net balance of workload growth showed as negative. This means that the SME construction sector has seen three consecutive years of reduced workloads. Expectations indicate that this is a trend that looks set to continue into 2011 with workloads expected to reduce again. Workloads have remained negative in all sectors with the exception of the social new build housing sector.
The FMB director-general Richard Diment warned that the construction sector has still not seen the worst of the recession. He went on to say “Cuts in government expenditure are making matters worse with more than half of building companies reporting falling levels of work in public repair and maintenance work. Our survey shows a sharp increase in those expecting workloads to contract once again in the first quarter of 2011.”
“The government is pinning its hopes of economic recovery on the creation of new jobs in the private sector but its policies are having exactly the opposite effect in the building sector. The increase in the rate of VAT earlier this month will cost the construction sector nearly 7,500 jobs this year alone. Cuts in public sector spending on social housing are having a particularly adverse impact with nearly half of building companies reporting that work in this sector had fallen.
“The construction sector has the potential to build Britain out of recession and we know that for every £1 spent on construction output generates a total of £2.84 in total economic activity. If this could be coupled with expenditure on infrastructure projects as well as tackling the growing housing crisis the government would be building the real foundations for a sustained economic recovery.”
Source: The Construction Index (24/01/2011)