Construction growth stalls amid doubts over Government infrastructure plans

THE construction industry in eastern England continued to stall during the final three months of 2011, as doubts were cast over the Government’s ability to boost private funding to deliver on proposed infrastructure projects, according to a new report.

The latest Construction Market Survey by RICS (the Royal Institution of Chartered Surveyors) shows that only 5% of surveyors questioned in East Anglia and the East Midlands felt the Government would be successful in its Autumn Statement pledge and generate sufficient institutional funding for planned infrastructure projects.

There was also a scepticism about the Get Britain Building Fund, with only 29% of surveyors across the region believing that it would have a positive impact on the sector.

The pessimistic assessment reflected the overall position of the industry in the final quarter of the year, with a net balance of 13% more respondents in the region reporting falling overall workloads (from minus 2% previously).

Once again, there was a slight divergence between private and public sector workloads. Private sector construction dipped only slightly towards the end of 2011 whereas overall public projects continued to fall, with 41% more surveyors reporting falls rather than rises in levels of public housing construction.

Across the UK, the North-South divide was once again in evidence with only London and the South East reporting positive net balance readings for workloads.

There was also no sign that the pressure being felt by the SME sector is lessening. Less than a third of respondents see recent Government initiatives as being helpful for this segment of the industry.

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Looking forward, surveyors in the region expect overall workloads to stagnate over the next 12 months and employment in the construction sector to fall further.

Input costs appear to have flattened out, with a net balance of 6% of surveyors reporting increasing costs (down from plus 29 the previous quarter).

Elsewhere, expectations for future profits were firmly downbeat in the region as 51% more surveyors predicted future margins to decrease rather than increase over the coming year, the sixteenth consecutive quarter with a negative reading.

Matthew Wallace MRICS of EC Harris, said: “Predictably, with workloads in the region continuing to fall and costs failing to decrease towards the end of the year, the outlook for the construction industry remains rather downbeat with no prospect of improvement in sight.

“Particularly worrying are the questions being raised over the Government’s plan to secure institutional funding for infrastructure projects.

“We would hope that this scepticism proves to be overly pessimistic, but the responses highlight the sizable job the Government still has to do in convincing industry professionals that this approach is going to deliver.”