An alarming rise in Scottish construction firms going bust requires immediate action to prevent further job losses, industry bosses have warned.

New figures released by the Insolvency Service show the continuing impact of the recession on the Scottish construction industry with 49 Scottish building firms forced into compulsory liquidation in the first three months of 2012.

In total, 198 construction firms have gone bust in Scotland in the past 12 months, a rise of 29% on the preceding year, 113% on two years ago and 161% on the year to March 2009.

The new results follow separate figures last week showing the UK has officially gone back into recession, led by a sharp decline in output from the construction sector. Due out in early July, the industry is bracing itself for Scottish GDP figures for Q1 2012 which are expected to confirm continuing declines in output from the Scottish industry in the first three months of this year.

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Leading industry trade body the Scottish Building Federation says a continuing rise in Scottish building firms going bankrupt show economic conditions are continuing to hit the sector hard. It has repeated calls for newly elected councillors across Scotland to prioritise capital investment from local authority budgets to help get the industry back on its feet.

Scottish Building Federation Chief Executive Michael Levack said: "Today we have fresh evidence that, far from showing signs of recovery, trading conditions for Scotland's construction industry are actually getting worse. 44 more building firms have gone bust in the past 12 months than did in the previous year. If we look back to the year to March 2009, the number of construction companies forced into liquidation has skyrocketed from 76 then to 198 in the past year – a rise of 161%.

"As the results of this week's local elections take shape, I hope all newly elected councillors will take note of the crisis our industry faces – and the huge impact this is having on jobs, skills and economic prospects up and down the country.

"Politicians at all levels of government can and must do more to prioritise investment in building the homes, schools, hospitals and other facilities our communities need. Without a pipeline of new work, more construction firms face the real prospect of being forced out of business and many more Scottish construction jobs will be lost."

(CD)