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Only 42 deals involving UK construction companies were completed in the period, compared with 100 in the first three months of last year.

There was a drop of two-thirds in terms of the total value of the deals: last year they were worth 拢730m, this year they amounted to 拢258m. The comparison with the first quarter of 2007 is even starker: a 96% drop from 拢7.2bn.

Peter Gray, a partner and takeover specialist at Cavendish Corporate Finance, said there was still no sign of life in the market since it stalled in spring 2007 (see graph). He said: 鈥淭he buyers鈥� strike goes on. People are still waiting for valuations to fall and compounding that is the dearth of decent companies coming onto the market. At the other end of the equation are vendors, who are reluctant to sell at low prices.鈥�

Gray added that most deals were still being done out of necessity, pointing to this month鈥檚 announcement by Dutch group Heijmans that it was putting its UK business up for sale because of financial problems at home.

Clive Sayer, chief executive of the acquisitive QS Baqus, said sellers were still resistant to the fact that valuations had fallen 鈥渁lthough the penny is starting to drop with some鈥�.

He said: 鈥淧eople are starting to get more realistic although some are still in cloud-cuckoo-land.鈥�

Deals done in the first three months of this year include two British forays in the US. In February Balfour Beatty bought North Carolina construction firm RT Dooley for $40m (拢27.5m) and in March Turner & Townsend bought Busby & Associates.

Despite the slump, Gray said there could be more activity from private equity groups after the summer. He said: 鈥淭hey are telling their investors that they鈥檙e ready to wade back in but time will tell if they put their money where their mouth is.鈥�