Scottish Building Federation chief executive Michael Levack has raised the spectre of a 'dam of insolvencies fit to burst' in the Scottish construction sector as industry confidence plummets.

According to the latest Scottish Construction Monitor, a quarterly survey of the Federation's membership of more than 700 individual construction firms, industry confidence is down eight points compared to the previous quarter and has slipped by 17 points since the beginning of the year. It now stands at minus 37, worse than for the first quarter of 2009, when the economy was in full recession.

The survey found that only one third of construction firms looking for bank finance over the past year have been able to secure it on satisfactory terms with almost a quarter being turned down.

Three quarters of employers responding to the survey described their finances as 'secure' but said that the outlook for their business remains difficult. Worryingly, 14% said that without additional bank finance, their business would be forced to restructure or to lay off workers or could even struggle to survive.

"We have already seen the number of Scottish construction firms going bankrupt increase significantly at the beginning of this year," said Levack. "My fear is that there is a dam of further insolvencies in the building industry that is fit to burst."