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Thu October 29 2020

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SME contractors face double dip recession

14 Oct 10 Small construction companies are heading into a double dip recession, according to the latest trade survey from the Federation of Master Builders.

Small construction companies are heading into a double dip recession, according to the latest trade survey from the Federation of Master Builders (FMB).

Respondents said that construction workloads continued to decline in the third quarter of the year, an 11th consecutive quarterly fall.

The proportion of firms reporting higher workloads remained broadly unchanged at 31%, but those expecting workloads to fall during the remaining quarter of the year increased from 28% in Q2 to 34% in Q3.

Firms reporting higher levels of enquiries declined from 34% in Q2 to 30% in Q3.

Some 42% of respondents indicated that public new build workloads had fallen, and a further 51% expect them to do so again in the next three months.

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Richard Diment, director general of the FMB, said: “The severe reduction in workloads for small construction companies working on public sector new build projects such as schools, hospitals and other infrastructure construction is a direct consequence of the Government’s public sector cuts.

“We are now moving towards a double dip recession in construction with more than half of our members anticipating falling workloads in the public sector over the coming three months. Only 9% of our members expect things to improve.”

Diment warned: “The survey results clearly illustrate the timing gap in government policy. The Government is working on the assumption that the private sector will create new jobs to replace those lost due to public cuts but this doesn’t look likely to happen for construction.

“The industry has already lost around 159,000 jobs and our survey data shows that workloads for SMEs in all sectors of the construction industry are a long way from the kind of consistent growth that is going to create stable jobs to replace those already lost, let alone those that will be lost as a result of the Comprehensive Spending Review and the VAT increase.”

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