Building woes are latest blow for Chancellor

STERLING tumbled to a seven- and- a- half- year low against the US dollar last night after the worst month for British housebuilders for more than two years hit the wider construction industry.

Markit said its index of activity in the construction sector, where scores above 50 show growth, slipped from 58.8 in October to 55.3 in November.

The slowdown was driven by the weakest increase in housebuilding activity since June 2013 and the pound plunged below $1.50 to levels not seen since April.

The construction report is a setback for George Osborne who used last week’s Autumn Statement to declare ‘we are the builders’.

It is not the first time the Chancellor has backed a sector of the economy only to see it falter.

In his 2011 Budget he said Britain would be ‘carried aloft by a march of the makers’ but the country’s manufacturers continue to struggle.

Construction output fell 2.2pc in the third quarter of this year while factory output was down 0.4pc.

The manufacturing sector has been in recession since the start of the year.

The slowdown in construction came as Osborne faced fresh criticism over his budget plans – and the prospect that taxes are set to rise to levels last seen under Gordon Brown.

Tax receipts are forecast to rise from 35.4pc of national income last year to 37.1pc in 2020-21 – the highest level since 2007-08 when the tax take hit 37.5pc.

The total tax take is due to soar by £217.6bn from £654.3bn in 201415 to £871.9bn in 2020-21. At the same time, spending is expected to rise by £108.2bn to £857.2bn, although this represents 36.4pc of national income, the lowest level since 2000-01 and down from 45pc under Labour.