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Civils firms braced for recession in North East

Civils firms in the North East are braced for a tough year, despite a bumper year last year, and have pleaded with the Chancellor, Alistair Darling, to drop new regulations on red fuel for contractors, and so moderate the effects of the downturn.

Douglas Kell, director of Civil Engineering Contractors Association (CECA) North-East says: "More work on motorways and trunk roads for the first time in five years has boosted some regions - but regrettably not the North-East. Here, an ongoing absence of major road work and a feared fall in housebuilding – with knock-on effect for groundworkers – are expected to tell on progress during 2008."

CECA research shows that the experience in the North-East broadly mirrors national trends.

"Unfortunately that means a further worry in our region could be a rise in costs," says Kell. "More than half of all respondents questioned nationally report costs already rising faster than a year ago, mainly due to higher fuel and materials charges.

"This will intensify from April 1. That's when new regulations imposed by Her Majesty's Revenue and Customs on use of lower taxed red vehicle fuel in contracting will impact on almost every area of civils work, from roadbuilding and repairing to preparation for commercial developments."

Mr Kell says: "We hope the Chancellor will ease financial worries and end the so called credit crunch. We shall have to monitor the volume of works being carried out to prepare sites for building developments.

"This is where one might look first for signs of civil engineering contractors being affected by changed monetary conditions."

"The results for large contractors have been generally stronger than those for small firms. But we hope the SMEs’ involvement in the supply chain will improve their overall workload."

CECA North-East represents 85 firms in the region.

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