Member Article

Doubt cast on Government infrastructure proposals

The Governments’ ability to boost private funding for infrastructure has come under fire, as the construction industry stalled during the last quarter of 2011.

Less than 20% of surveyors were satisfied with the Governments proposals in the Autumn Statement, and were concerned that they would be insufficient to generate sufficient institutional funding for planned projects.

Only 25% believed that the Get Britain Building Fund would have a positive impact on the sector.

Simon Rubinsohn, RICS Chief Economist, commented: “Predictably, with workloads continuing to fall and costs slowly increasing towards the end of the year, the outlook for the construction industry remains rather downbeat with no prospect of improvement in sight.”

The pessimistic outlook was reflective of the industry as a whole, with a net balance of 7% more respondents reporting falling overall workloads from -1%.

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

Significantly, there are also no sign that the pressure being felt by the SME sector is lessening. Indeed, a small majority of respondents see recent government initiatives as being unhelpful for this segment of the industry.

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

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

Looking forward, surveyors expect overall workloads to stagnate over the next twelve months and employment in the construction sector to fall further. Input costs continue to rise – albeit at a slower pace than previously – with a net balance of 19 per cent of surveyors reporting increasing costs.

As result of this, expectations for future profits were firmly downbeat as 44 per cent more surveyors predicted future margins to decrease rather than increase over the coming year; this is the sixteenth consecutive quarter with a negative reading for this series.

This was posted in Bdaily's Members' News section by Ruth Mitchell .