The Government's hopes for an SME led recovery have been dealt a serious blow by the latest results from the building industry, according to the Federation of Master Builders (FMB), the largest trade association in the UK construction industry.
The latest results from the FMB's quarterly State of Trade Survey, the only survey of small and medium sized building companies, show that 90% of members responding in Q1 2011 expect materials costs to rise over the next six months marking a two and a half year high.
Richard Diment, Director General of the FMB said:
"Materials cost inflation is a serious threat as it creates an upward pressure on prices that restricts demand. This in turn stifles growth and job creation. If the Government is serious about SMEs creating jobs and leading the recovery they need to do more to help the small building firms that provide jobs for everyone from labourers to architects. Starting 2011 with a VAT hike was not the way to go about it."
Diment continued:
"The first quarter of 2011 has been another dismal one for the sector with workloads contracting for a 13th quarter in a row. Against this backdrop of rising prices, falling demand and ever increasing Government burden, it is hardly surprising that the number of general building firms that reduced employment levels in the first three months of 2011 rose to 43%."
Diment concluded:
"Despite the Coalition Government being still relatively new, it has so far managed to increase VAT, remove the cap on planning fees, resurrect a development tax they had promised to scrap, and create a planning vacuum. If the Chancellor wants a recovery, he is going to have to pull a considerable number of rabbits out of the hat on Wednesday."
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