NEARLY nine out of 10 UK construction firms expect public spending cuts to act as a drag on operating conditions, says a new report.

And around two-thirds of firms described the UK’s planning system as an obstacle to business, while four out of ten have seen a deterioration in the availability of finance over the past year, says a survey of the industry commissioned by the CBI and Speedy Services.

But respondents said the Chancellor’s Autumn Statement contained encouraging news for the sector, including details of the Funded Construction Pipeline and infrastructure spending.

The survey portrays a sector well-placed to boost skills and create jobs, with more than three-quarters of firms planning to maintain or increase spending levels on training and investment in apprentices in the coming year.

Of the 635 construction leaders who took part, 40% responded that the availability of finance had deteriorated in the past 12 months, 52% reported no change, and only 8% said they had seen an improvement.

Small and medium-sized businesses have been particularly affected by a lack of finance, with nearly half reporting a deterioration in availability in the past 12 months, and more than a third expecting a further deterioration in the coming year.

More than 85% of firms expect public spending cuts to have a significant or very significant impact on their business. Given these tough operating conditions, a quarter (24%) of firms expect business to decline in 2012.

While two-fifths expect growth, the vast majority of these anticipate growth will be weak. Dr Neil Bentley, CBI deputy director-general, said: “Construction firms are facing tough operating conditions, and they are clear about what can be done to give the sector a boost.