A squeeze on UK government spending has begun to hit the construction industry.

Construction and home building companies say they are feeling the slowdown in public sector spending.

Until recently the construction sector has enjoyed an boom from increased government spending on schools, hospitals, roads and houses.

The government spending constraints also seem to be resulting in cuts to renovate council housing, which has provided lucrative work for many builders.

Official figures show that the building of public housing fell by 35 per cent in the first quarter.