CONSTRUCTION firms in Scotland faced challenges in the fourth quarter as political uncertainty weighed on the sector, a study has found.

The Federation of Master Builders Scotland found small and medium sized firms working in Scotland suffered a drop in workloads overall while confidence in the outlook for businesses weakened.

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FMB Scotland director Gordon Nelson said the fall appeared to be linked to the political uncertainty concerning Brexit and the General Election, noting these dominated 2019.

“The workloads and future prospects of many construction SMEs are determined by consumer confidence and spending power and so it’s not surprising therefore that the results in Q4 dipped,” said Mr Nelson.

He said while Brexit is set to go ahead on January 31, continued political uncertainty could impact on the building sector in Scotland.

“The SNP continues to press for a second independence referendum,” said Mr Nelson. “Whilst this has been rejected by the UK Government, the ‘indyref 2’ question will persist. Quite what effect this will have on the performance of Scotland’s construction sector remains to be seen.”

Builders in Scotland are also concerned about the prospect of cost increases and potential skills shortages.

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Mr Nelson said the new Scottish National Investment Bank could provide a badly needed boost for small building firms by harnessing the potential of the construction industry to build new homes across Scotland.

MSPs last week passed the legislation to establish the bank.

In a report completed by Experian for the FMB a balance of 13 per cent more builders in Scotland reported that workloads had increased in the fourth quarter rather than falling, and expected that trend to continue. That compared with a positive balance of 32% in the preceding quarter.

Across the UK a balance of 4% of respondents were positive, against 10% last time.

Some 84% of respondents in Scotland foresaw higher material costs over the next six months. A balance of 56% expected wages and salaries to rise. Fifty four per cent were struggling to hire bricklayers, with 53% finding carpenters and joiners were in short supply.

A survey by Scottish Chambers of Commerce and the University of Strathclyde’s Fraser of Allander Institute found that Scottish business confidence was at “worryingly low levels” in the fourth quarter. The results indicated that companies were in a period of “stasis” as global and domestic factors including Brexit-related uncertainty weighed on optimism and investment,