THE workloads and confidence of small and medium-sized builders in Scotland tumbled in the fourth quarter of last year, a key survey shows, amid continuing skills shortages.

Surging prices for materials, which are hitting Scottish builders’ profit margins, are also flagged by the survey. Sterling’s post-Brexit vote weakness has sent the cost of imports surging.

The composite indicator for Scotland, comprising current and expected workloads and inquiry levels and calculated as a net balance of weighted responses, tumbled back into contractionary territory as it plummeted by 19 percentage points to -12, the survey from the Federation of Master Builders (FMB) shows.

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The FMB said around 16 per cent of weighted responses were positive, down from 25 per cent in the previous quarter. In contrast, the proportion of ?rms with negative weighted responses grew to 28 per cent from 18 per cent in the preceding three months.

Neutral weighted responses came from 56 per cent of respondents.

British Chambers of Commerce this month cited the Brexit vote as a factor that had exacerbated skills shortages in a tight labour market.

Gordon Nelson, director of FMB Scotland, said: “Scottish construction firms experienced a significant dip in the final quarter of 2017. Prior to these latest results, we had seen seven consecutive quarters of growth for small builders in Scotland. There are several contributing factors, not least the skills shortages which continue to hamper many [small and medium-sized enterprises], with rising shortages of key trades like carpenters, plumbers and plasterers.

“As a result, the wages for these increasingly scarce skilled trades continue to rise sharply.”

He added: “What’s more, material prices are also rising and almost 90 per cent of builders think this trend will continue over the next six months.

“This means Scottish construction SMEs continue to see their margins squeezed, with many choosing to absorb costs rather than pass them on to their clients.”