According to latest Federation of Master Builders trade survey more than a third see no alternative but to start another round of staff job cuts in 2011 as workloads are predicted to fall even further.

Richard Diment, FMB Director-General said: “The construction sector has still not reached the bottom of the most savage recession for the industry in living memory.

“Cuts in government expenditure are making matters worse with more than half of building companies reporting falling levels of work in public repair and maintenance work.

“Our survey shows a sharp increase in those expecting workloads to contract once again in the first quarter of 2011.”

He warned: “The Government is pinning its hopes of economic recovery on the creation of new jobs in the private sector but its policies are having exactly the opposite effect in the building sector.

“The increase in the rate of VAT earlier this month will cost the construction sector nearly 7,500 jobs this year alone.

“Cuts in public sector spending on social housing are having a particularly adverse impact with nearly half of building companies reporting that work in this sector had fallen.”

He added that the construction sector had the potential to build Britain out of recession.

Diment said if the Government had of invested in building like it had infrastructure to tackle the housing crisis it would have built real foundations for a sustained economic recovery.