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Rising fuel costs threaten recovery

24 May 12 Rising fuel costs are putting a fledgling recovery in the infrastructure sector at risk, according to civil engineering contractors.

Today sees the publication of the 12th annual Civil Engineering Contractors Association (CECA) costs trend survey. The survey shows that the cost of fuels continues to race well ahead of general inflation in the economy, putting companies delivering improvements to the UK’s transport and utility networks at risk.

In April CECA members from across the country provided detailed information about how their costs for 20 key inputs have changed over the course of the last year.

The survey revealed that, while employment cost inflation is well below the historic average, prices for the diesel and gas oil that power the industry have continued to escalate, up an average of 8.5 and 8.4 per cent respectively.

While this represents a slight reduction on last year’s figures (10.4 per cent for both fuels), the rises are still far in excess of general inflation in the economy. With tender prices only just starting to rise again after three years of steep falls, the impact of these fuel price rises continues to squeeze struggling contractors’ margins.

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Commenting on the results, CECA director of external affairs Alasdair Reisner said: “The government has correctly recognised that the infrastructure sector will play a central role in rebuilding the economy, reducing congestion and improving the delivery of services to businesses around the UK.

“However, while much is being asked of the industry in terms of delivery of these essential infrastructure improvements, the companies involved are seeing sharp cost increases at a time when their tender prices remain depressed.

“While industry will seek solutions to this squeeze, it cannot sustain this situation for the long-term.

“Over the coming months CECA will be seeking to work with government and others, to consider potential innovative approaches to tackle fuel cost escalation for the sector.”

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