Small and medium construction businesses in Scotland suffered in the run-up to the independence referendum vote, research from the Federation of Master Builders has shown.

The FMB’s State of Trade Survey (Q3 2014) showed sentiment in Scotland in the third quarter of the year was the lowest in the UK.

The study uses a composite indicator combining actual workload, expected workload and enquiries for work. The responses are then weighted by the size of each firm and a net balance given for those saying higher or lower for each question.

The Scottish balance slipped seven percentage points in the quarter to minus-five per cent. The UK as a whole was marginally behind from 25 per cent to 24 per cent although there were wide variations across remaining countries.

English firms reported a balance of 28 per cent, down from 30 per cent, while those in Wales were more confident with the balance rising from 23 per cent to 28 per cent. The improving conditions were most marked in Northern Ireland where the balance surged from three to 15 per cent.

Scottish companies reported a minus-10 per cent balance at the end of the first quarter but there did appear to be improvements through the spring and into the summer when a two per cent balance was recorded at the end of June.

Gordon Nelson, FMB Scotland services director, told The Herald: “Unlike the rest of the UK nations, workloads and enquiries for small construction firms in Scotland have failed to consistently grow and improve over this past year.

“Many FMB Scotland members have commentated that in the lead-up to the referendum the uncertainty impacted upon their business.”

Some companies in the housebuilding and commercial property sectors previously indicated a slowing of activity as the independence referendum drew nearer.

Mr Nelson believes that with the uncertainty gone there may now be a greater willingness in Scotland to move forward with building projects of various sizes.

He said: “It is our hope that once again businesses and consumers will start to invest in a similar manner to their counterparts in England, Wales and Northern Ireland.”

Mr Nelson would like VAT to be reduced on housing renovation and repair work as a way to boost the sector. He cited research from Experian which suggests cutting VAT from 20 per cent to five per cent could create an additional 2,500 construction jobs in Scotland as well as 2,000 more jobs across the wider economy.

He added: “The stimulus effect of this VAT reduction would boost the economy by more than £115 million in 2015 alone. Such a move would also keep money in the pockets of hard working Scottish families who are struggling with the cost of living.”

Across the UK, FMB members expect prices, wages and material costs to continue to rise over the next six months, although the pace of increases is moderating.

Scottish GDP figures released this week showed the construction industry growing 3.6 per cent in the second quarter of the year.