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Spending cut fears hit construction work

Surveyors are already seeing a fall in workloads in the wake of the Comprehensive Spending Review.

According to the RICS Construction Market Survey, 59% per cent of chartered surveyors reported there had been no movement in construction workloads during the third quarter of this year.

Of those that did see a change, the number of surveyors saying that workloads fell was ten per cent higher than those reporting an increase.

Insufficient funding for new developments and continued concerns over the economy were among the factors cited as affecting construction projects.

Surveyor sentiment about future work on the RICS survey index was negative for all sectors of the construction industry, with sentiment over public housing work at its lowest level since the survey began in 1994. 

Across the UK, all regions reported negative net balances in the index for the third quarter. Northern Ireland recorded the largest deterioration in workloads, while  Scotland also experienced sharp declines in workloads along with the South West and Wales

Over the next 12 months, 20 per cent more surveyors expect employment to fall further rather than rise. The overall outlook for the coming year also worsened, with surveyors reporting output expectations falling at a faster rate than projected at the time of the previous survey. The net balance for output expectations is at its worst level since the first quarter of 2009. The majority of surveyors continue to expect profits to fall further over the next year. 

RICS chief economist Simon Rubinsohn said: “Government data shows the construction sector has rebounded more strongly than many anticipated but our latest survey casts considerable doubt on whether this improvement can be sustained. The collapse in public funding will inevitably have a major impact on the sector.

“Worryingly, the responses from small businesses operating in the construction industry indicate that they are being squeezed by increased competition for projects from larger firms. Indeed, their long term viability is being put in danger a time when government has pledged to help small businesses.”

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