Mouchel waits to hear worst of government cuts

Outsourcer Mouchel expects its full year results to be at the lower end of expectations as government spending cuts create a difficult trading environment.

Mouchel, which provides maintenance for Britain's highways, said it had done well in securing new contracts worth £650 million in the past year but that a lack of clarity over the government's austerity measures weighed on its outlook.

"Trading remains challenging in some areas given the uncertainty that exists in many public sector markets. We expect this situation to continue until the Government's announcement of the spending review on October 20 and probably for some months thereafter," the company said.

The company said it expected to make savings of £20 million after a cost reducing exercise and that its order book stood at £1.8 billion, compared with £1.9 billion this time last year.

Last month a contract on which Mouchel was named preferred bidder, for Bournemouth council, was deferred after councillors were unsatisfied with the company's proposal.