Spending cuts dent construction sector

THE outlook for the construction sector in the East of England has begun to worsen as spending cuts begin to bite, according to a new survey.

The Royal Institution of Chartered Surveyors (RICS) UK Construction Market Survey for the second quarter of 2010 found that sentiment within the eastern region has already started to turn amid as fears over the scale of public spending cuts and ongoing uncertainty about prospects for the economy. Despite some encouraging signs at the beginning of the year, the latest data shows that 2% more chartered surveyors are reporting a fall rather than a rise in total construction workloads in the East of England.

This compares with the first quarter of the year when 10% more surveyors reported rising rather than falling workloads.

Public housing and other public works were the worst affected sectors in the region, with 26% and 15% of chartered surveyors reporting a fall in workloads respectively, compared with 11% and 28% who reported an increase on the previous quarter. The large fall in the public works sector is mainly attrributable to the suspension of the Building Schools for the Future programme.

David Potter of RICS East said: “This survey suggests that it is too early to conclude that the construction industry is on the road to recovery despite the strong contribution the sector appeared to make to the latest GDP data.

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“Significantly, spending cuts are already having an adverse effect on sentiment and although the cost of tradesmen and overheads continue to fall, raw material prices are rising, creating a difficult operating atmosphere.”

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