The association is now predicting a 2.9% drop in construction output this year compared to its previous forecast of a 5.2% fall in 2012.

The forecast predicts £104bn worth of work across the industry this year.

Output will be flat in 2013 before growing 3.4% in 2014 when an industry recovery will begin.

Infrastructure is a main growth area with rail construction set to expand by 56% over the next four years.

Energy construction is expected to rise almost threefold by 2016 while private sector construction will grow by 21% during the same period.

Association chief executive Michael Ankers said: “Public sector spending cuts are now beginning to bite and with the exception of a steady recovery in the private housing market, where starts are forecast to increase by 5 per cent this year and 11 per cent next, the private sector is pretty subdued.

“What is particularly disappointing is the weakness of the private commercial market where output is expected to decline both this year and in 2013. Office development is slowing down and private finance for social infrastructure is unlikely to make a rapid comeback.”