A third of small to medium-sized building firms fear they will have to cut jobs as the construction recession continues, according to a new survey.
The Federation of Master Builders, in its State of Trade Survey, says employment dropped in the final quarter of 2012.
Material costs are also set to rise, while workloads decreased last year and are expected to continue declining.
However, there were more optimstic signs in the housing sector, as the rate at which workloads and employment dropped in the fourth quarter of 2012 slowed.
Many specialist trades also reported the first rise in employment since early 2011.
Outside the residential sector, the decline in workloads accelerated, with many firms saying they may have to introduce price rises as overheads continue to eat into margins.
FMB chief executive Brian Berry said: “These figures reinforce what we already knew that 2012 was a very tough year for construction, and the outlook for 2013 is still bleak. The Government must act now to support building firms and prevent workers from losing their jobs over the next 12 months.”
“The Government’s support for infrastructure spending is good but it needs to look at ways it can boost the building industry, not least the urgent need to build more new homes by freeing up land, easing planning red tape and by pushing investment through its new Business Bank.
“A VAT cut on building work to make homes more energy-efficient would also help provide an immediate boost for small builders and have the multiple benefits of boosting the economy, helping householders save money on their fuel bills and reducing carbon emissions.”
All 12 UK regions and devolved nations had negative “composite” readings, which combines responses for workloads, expected workloads and enquiries for new work.
Wales, Northern Ireland and London saw their rates of decline slow down, while the opposite was true in Scotland, the North, the East Midlands and the South West.