The drawn out negotiations over the UK's exit from the EU are reported to be hitting the construction industry.

Blane Perrotton, managing director of the national property consultancy and surveyors Naismiths, said a loss of momentum has caused the construction sector to suffer its sharpest fall in quarterly output for more than five years.

"The picture is especially bleak on the commercial property side. Months of false dawns on Brexit negotiations have whittled away confidence and left many businesses feeling punch drunk.

"Against a backdrop of seemingly perpetual flux, businesses have understandably postponed big investment decisions, and we're regularly seeing larger companies activate Brexit contingency plans and smaller firms mothball plans to scale up their premises.

"Even residential construction - so long the industry's star performer - declined, revealing the scale of the task facing the Government as it seeks to stimulate a wave of new housebuilding.

"Nevertheless there are some bright spots. On the front line we're seeing consistent appetite among developers to convert office buildings into residential units under the extended and popular Permitted Development Rights.

"November's increase in interest rates has yet to fully filter through and developers are still finding funds available. But finance is increasingly coming from the challenger, rather than high street, banks.

"This greater caution among the mainstream lenders is likely to set the tone for the industry as a whole as 2017 limps across the line.

"Last night's Brexit deal may have unblocked the negotiations for now, but as long as confidence and clarity are lacking, the construction industry will continue to make halting progress at best."