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Nearly a third of small and medium UK building firms have shed staff in the first three months of 2013, a survey by the Federation of Master Builders has revealed.

The FMB鈥檚 quarterly state of trade survey found 30% of builders have shed staff in the first three months of 2013, up from 27% in the final three months of 2012.

The results also showed a sharp decline in workloads with 39% of respondents reporting a drop, up from 31% in the final quarter of 2012. Plus, the number of respondents reporting and increase in work fell to 18% from 22%.

Respondents predicted that wages, materials and output prices would all go up in the next six months.

Brian Berry, chief executive of the FMB, said a fairly positive set of results in the final quarter of 2012 had indicated the 鈥渋ndustry may be turning a corner鈥�.

鈥淭hese latest survey results, however, paint a bleak picture, and our members are telling us that they are faced with the unenviable choice of putting up their prices or laying off staff,鈥� he said.

He called on the government to cut VAT on home improvements to help stimulate activity in the industry.