The Scottish Building Federation has warned that the latest figures for UK construction indicate a "deepening crisis".

The Office of National Statistics (ONS) said construction output in the third quarter of 2012 fell by 2.6% compared with the second quarter of 2012, making it the lowest since the second quarter of 1999.

SBF Chief Executive Michael Levack, said: "These figures show a fifth consecutive quarter of reduced output from the UK construction industry and significant declines in new work across the public and private sectors. The UK Government needs to recognise the severe impact this deepening crisis will have on prospects of recovery in the wider economy."

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The drop shows a continuation of the decline first seen in the third quarter of 2011.

The third quarter fall was precipitated mostly by the private commercial sector but was offset by an increase in new infrastructure work.

The statistics also showed falls in the volume of construction output in the third quarter of 2012 when compared with the second.

Drops in seven of the nine sectors also occurred, with the largest decline being in private commercial, which fell by 8.2%.

The estimated volume of all new work fell by 2.2%, while repair and maintenance declined by 3.2% in the third quarter compared with the second quarter of 2012.

The total volume of construction output in the third quarter of 2012 fell by 11.3% compared with the same quarter in 2011.

Mr Levack continued: "A healthy construction industry is a key pillar of a healthy economy. A further drop in building output should set the alarm bells ringing. It emphasises how fragile the economy still is.

"Government needs to redouble its efforts to increase direct capital investment – not only for the benefit of the construction sector but in the interests of delivering a sustainable economic recovery."

(IT)