The research from consultancy Gardiner and Theobald shows that regionally the north west is hardest hit, with inflation falling from 5 per cent this year to 4 per cent in 2009. Tender price inflation won’t start to rise again across the country until 2011.
G&T partner Gavin Mugatroyd said: ‘We are seeing less demand but increases in input costs which means contractors will need to cut margins to win work.
‘What we aren’t seeing is a cut-throat approach to winning work – people are being cautious about what they are going for.
‘We also saw a much greater reluctance than normal from companies about forecasting beyond 2009 – they clearly feel the market is volatile.’
Only Northern Ireland is bucking the trend with inflation rising from 5 per cent to 6 per cent in the province on the back of huge inward investment, including £20 billion to be spent on schools, hospitals, roads, social housing and water/waste in the next 10 years.
The research highlights opportunities for contractors elsewhere in the UK because of the shortage of capacity in the local industry.