Government failing to get infrastructure moving

Government failing to get infrastructure moving

The amount of infrastructure construction projects did not increase during the second quarter of 2012, despite the government’s continued attempts to boost the sector through private sector investment, according to the latest RICS Construction Market Survey.

Surveyors reported that infrastructure workloads across the country were flat during the second quarter (net balance -4%), and little movement has now been seen in the sector since the end of 2009. This is despite attempts by the government to stimulate the economy through privately funded infrastructure projects.

RICS said this low level of activity was reflected across the entire construction sector with 4% more respondents reporting falls rather than rises in workloads. It is the public sector where the pressure continues to be greatest, however.

Profit expectations continue to deteriorate, with the net balance falling from -18% to -26%, reflecting the continuing pressure on margins as input costs rise more rapidly than output prices. RICS said that increasing competition is leading some companies to bid for work at below cost price in order to secure contracts.

Regionally, the South, Wales and the Midlands saw overall workloads stabilise, while the North, Scotland and Northern Ireland experienced further declines.

Despite this, surveyors are cautiously optimistic, with a net balance of 16% more surveyors predicting workloads to rise over the coming year.

“Infrastructure workloads failed to pick up despite the government’s attempts to boost the sector through private investment,” said Simon Rubinsohn, RICS chief economist.

“More action to back up the rhetoric is urgently needed if the construction industry is to play a meaningful role in driving the economy forward over the next few years.

“Ominously, profits continue to be squeezed with some surveyors are reporting that increasing levels of competition are leading some companies to bid for work at a below cost price in order to secure contracts.”