Leaders of the Scottish Building Federation have highlighted “a dam of insolvencies fit to burst” across the country as confidence sunk to its lowest level since the start of 2009.

Only one-third of construction firms seeking bank finance for their business over the past year had been able to secure it on satisfactory terms, with almost a quarter seeing their request for funds turned down.

Three-quarters of employers who responded described their finances as “secure” but said the outlook for their business remained difficult.

But 14% said that without additional bank finance, their business would be forced to restructure or to lay-off workers, or they could even struggle to survive.

SBF chief executive Michael Levack said: “Despite efforts to talk up recovery, the outlook for many Scottish construction firms remains extremely tough.

“It is also absolutely clear that restrictive lending practices and unaffordable credit continue to blight the industry and are one of the reasons why confidence remains so shaky and the prospects for recovery so uncertain.

“We have already seen the number of Scottish construction firms going bankrupt increase significantly at the beginning of this year.

“My fear is that there is a dam of further insolvencies in the building industry that is fit to burst.”

The warnings come despite the Office for National Statistics recording a sharp rise in Scottish construction output in the second quarter of this year.