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Tory hopes of a UK economic revival were dealt another shattering blow as housebuilding activity plunged to its lowest level in nearly three years.

According to the Markit/CIPS construction purchasing managers’ index growth in the building sector sank to a 10 month low in February.

Construction bosses said their customers were less willing to commit to projects as a result of the increasingly uncertain economic outlook and that this had led to a squeeze on them hiring new brickies.

Housebuilding growth slumped to its lowest level since June 2013.

David Noble, chief executive of the Chartered Institute of Procurement and Supply, said: “The sector felt the pressure of challenging global economic conditions and softer demand growth.

Read more:What recovery? Millions of Brits getting poorer each month

“The housing sector, which once led the way with a robust performance, offered a poor show.

“The next few months will be critical to understanding whether this dampened optimism was justified and whether there are still more serious issues to be unearthed.”

(Image: Rex)

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, added: “Recent sharp falls in business confidence, partly reflecting economic uncertainty brought about by the EU referendum , are subduing the recovery in construction activity.”

The figures are another headache for beleaguered Chancellor George Osborne after Tuesday’s manufacturing index showed it had slipped to its worst month in almost three years in February.

Howard Archer, chief UK and European economist at IHS Global Insight, said: “This is more worrying news for the UK economy.

“While the UK will always be highly reliant on the services sector, it really does need to see growth from other sectors as well.

“The Government will be particularly disappointed to see housebuilding slow given that it is looking to address the UK’s acute housing shortage.”