Confidence in the building industry has collapsed with only 5% of small building companies expecting workloads to increase in 2012, according to the latest State of Trade Survey from the Federation of Master Builders (FMB).

The FMB's State of Trade Survey, the only one of its kind looking at construction SMEs, reveals that workloads in the SME construction sector have declined in each of the 16 quarters to the end of December 2011, and that confidence in the repair, maintenance and improvement (RM&I) market is set to plunge.

Brian Berry, Director of External Affairs at the FMB said: "The disastrous results for the RM&I market are very alarming given that the Government will be launching its Green Deal home improvement initiative in October. Market conditions in the building industry haven’t been this bad since the first quarter of 2009. Clearly, robust incentives for householders are needed if the Green Deal initiative is to succeed in a depressed market.


"50% of FMB members responding anticipate workloads falling still further in the coming quarter compared to 33% in Quarter Three of 2011. This indicates that the increasingly uncertain outlook for the economy and more downbeat prospects for employment may lead to a retrenchment in consumer spending, particularly on discretionary items such as non-essential RM&I work."

The FMB believes that although the Green Deal has no upfront financial costs, the Government needs to accept that it is still perceived by householders as a debt.

Mr Berry concluded: "If the Government’s Green Deal initiatives is to succeed in its ambition to retrofit 14 million properties by 2020 then it will need to provide householders with additional financial incentives such as a reduced rate of VAT or lower Stamp Duty."

(CD/GK)