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RICS: Impending general election is stalling new projects

Construction workloads fell in all sectors towards the end of 2009 amid signs the impending general election is stalling new projects, according to the latest RICS survey of the industry.

The RICS workload survey found 12 per cent more chartered surveyors reported falling rather than rising workloads for the final quarter of 2009.

It is the seventh quarter of decline and compares with a net balance of 6 per cent reporting falls in Q3, indicating that a recovery in the construction sector is further out of reach.

Public non-housing workloads declined for the first time since Q1 2009, indicating that there has been a slowdown in planned government capital spending projects.

Many respondents cited the general election, as well as the continued lack of development finance, as the main cause of inactivity.

Overall expectations for workloads, employment and profits for the next 12 months are all fairly downbeat.

Workloads are projected to be slightly higher with two percent more chartered surveyors expecting an increase, but this positive balance is modest and is lower than the third quarter reading of 9 per cent.

Meanwhile, the perception is that jobs will continue to be lost, with 5 per cent more chartered surveyors believing this will be the case, and profit margins squeezed as competition for the limited amount of work on offer intensifies.

Significantly, 29 per cent more respondents to the survey still expect profits to drop further than begin to see an increase in margins.

RICS chief economist Simon Rubinsohn said: “The acceleration of capital spending programmes seems to have faltered in recent months and our members’ perception is that this is due to more caution being exhibited by the government in the approach to the general election.

“Coupled with the fact that development finance is still in very limited supply, this sector is likely to remain locked in recession for at least the first half of this year.”