Public sector cuts have led to a sharp decline in the construction market during the second quarter of 2010, according to the latest RICS construction survey.

The figures, which are based on asking surveyors whether workloads are up or down on the month before, fell significantly due to a dip in public works and infrastructure projects.

While most of the market remained steady, the net balance of responses for public sector construction was 30% down.

This has been attributed to the coalition’s axing of the previous government £55bn Building Schools for the Future programme and a lack of clarity from the government on future projects.

Only in London and the south-east was the overall market unscathed. Workloads fell everywhere else , with Northern Ireland feeling the pinch most.

Simon Rubinsohn, RICS chief economist 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.

“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.

“Surveyors are also reporting an increase in competition for work as larger firms bid for smaller projects.

“Meanwhile, a continued lack of clarity from the government on existing projects is adding to the uncertainty. Given all these factors, it’s of little wonder respondents to the survey are feeling gloomy.”

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