ENGINEERING giant Carillion’s collapse in January has contributed to a four per cent drop in loans to the commercial property sector in the UK.

The news follows recent Scottish Government figures that show construction output fell in Scotland for the seventh quarter in a row between July and September last year.

Now a slump in loans to £4.10 billion in January – when Carillion collapsed – from £4.24bn in December, has been recorded by property lending platform Lendy.

The figures are troubling at a time when there is usually an increase in lending to and investment in the construction sector as new commercial building projects begin.

The drop in lending has been attributed to nervousness caused by the fall of Carillion, which was the second largest construction company in the UK.

“The unexpected fall in lending highlights just how big an impact Carillion has had on the commercial property industry,” said Lendy co-founder Liam Brooke.

“Lenders who have had to deal with heavy losses following Carillion’s collapse may think twice before giving loans for some future commercial real estate projects.”

Despite the drop in lending, an industry body has forecast marginal growth in the Scottish construction sector over the next five years.

The Construction Industry Training Board (CITB) has predicted average annual growth of 0.1 per cent between 2018 and 2022. Its recent report suggested falls in infrastructure work would be mitigated by growth in most of the remaining sectors.

However, it added that Scotland needed more than 10,000 new workers between 2018 and 2022 because of an ageing workforce – with demand for supervisors, logistics and civil engineers, among other roles.

The report highlighted a number of major projects in the pipeline in the industrial construction sector, including the £700 million Edinburgh International Business Gateway mixed-use development. and a £110m expansion of GlaxoSmithKline’s Montrose site.