Projected cuts to Scotland's capital investment budget could cut 47,000 jobs from the Scottish construction industry, warns the Scottish Building Federation.

The body, which represents more than 700 individual Scottish construction firms from sole traders to major national contractors, has issued a last minute plea to Chancellor George Osborne to consider the huge impact on construction employment of cutting capital budgets as part of the UK spending review, to be presented at Westminster tomorrow.

SBF chief executive Michael Levack suggests the effects of a projected 40% cut in Scotland’s capital budget between 2009/10 and 20014/15 would be "highly counterproductive" and could undermine attempts to build a sustainable economic recovery.

Official statistics show that, between 2008 and 2009, Scottish construction industry output fell by £1.7 billion while 42,000 people directly employed in the industry lost their jobs.

Over that period, the Federation estimates that a further 8,000 Scottish jobs dependent on the industry would also have been lost.

The SBF’s letter to the Chancellor also warns that any signs of recovery in private sector construction remain “fragile” and urges the introduction of “targeted measures to stimulate private sector construction activity” to compensate for “any cuts in capital investment that are deemed to be unavoidable”. Cutting VAT on home building repair and maintenance works is cited as a specific example of a targeted tax incentive which could help the industry to recover.