A trading update to the City today said: “In respect of outlook, in the UK we have positioned the Group to reduce volumes in our UK Construction business.

“In our UK Construction business, trading conditions in the year have remained difficult, in particular in our Eastern and Midlands regions, where we are in the process of reorganisation to reflect the current market conditions.

“Overall for the year we anticipate a small decrease in revenue with a small recovery in margins before reorganisation costs.

“In our core London office market, we anticipate that trading conditions will continue to improve with a growing pipeline of opportunities.

“We also continue to target sectors of growth in the data center, hospitality and high end residential sectors.”

News of the continued troubles in the UK came as ISG announced it was buying a minority stake in a Brazilian fit-out and refurbishment specialist and had won a £127m data center deal in Norway.

ISG said it had raised £7.75m through a share placing to help fund buying the stake in Brazil’s ACE, which employs around 115 staff and turned over £10m last year making a £1.1m profit.

Under the terms of the deal ISG will take a 20% stake for £1.9m, with an option within 12 months to spend £12.7m for the contractor, payable over four years.

David Lawther, Chief Executive Officer of ISG, said: “We are delighted to have been able to find a point of entry into an exciting new geographic area for ISG, Brazil, the sixth largest economy in the world.

“Our method of entry via an initial minority interest in ACE will permit us to gain a deeper market knowledge and understanding of the business before we exercise our option to acquire the remaining shares over a four year period.

“We believe that we will be able to assist ACE’s future growth by introducing our international client base and enabling the development of new sectors.”