THE continuing slowdown in Britain’s construction industry is another sign “Osborne’s recovery is built on sand,” John McDonnell, the shadow chancellor, has claimed as analysts attributed the fall in output to uncertainty over the outcome of the EU referendum.

The Office for National Statistics(ONS) said output fell 3.6 per cent in March compared to February due to declines in the amount of new work being carried out as well as repair and maintenance activity; economists had forecast a slide of 3.2 per cent.

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Over the first three months of the year the ONS revised down its earlier estimate of a 0.9 per cent fall in construction to 1.1 per cent compared with the previous quarter.

March marked a third consecutive decline in month-on-month construction output; the first such run since the monthly series started in 2010. Construction accounts for around six per cent of the UK economy.

Mr McDonnell said: “It is deeply disappointing that despite George Osborne’s rhetoric on construction the industry shrank by 1.1 per cent in the first quarter of the year.

“Output in the construction industry has fallen since Osborne claimed at last year’s Tory party conference that ‘we are the builders’, and comes on the back of ONS figures earlier this week showing UK industrial production in recession. This is further evidence that Osborne's recovery is one built on sand,” declared the Labour frontbencher.

He added: “These figures should be a wake-up call as to the urgent need for long-term, patient investment in skills, infrastructure and technology; otherwise our unbalanced economy will continue to be a risk to Britain’s prosperity.”

The ONS figures come a day after Mark Carney, the Bank of England Governor, said a Brexit vote on June 23 could trigger a possible ''technical recession'' in the UK as he warned the fall-out could hit growth, jobs and see the pound plunge in value.

The Bank also cut its UK growth forecasts from 2.2 per cent to 2.0 in 2016, from 2.4 to 2.3 in 2017 and from 2.5 to 2.3 in 2018.

Howard Archer, chief UK and European economist at IHS Global Insight, said "construction nosedived in March".

He explained: "If the referendum results in a vote to stay in the EU, the construction sector will obviously be looking to the reduced uncertainty to cause delayed projects to kick in.

"However, there is the concern for the construction sector that confidence and economic activity may not bounce back that well after the EU referendum and that clients remain reluctant to commit to major projects."

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "The latest construction figures provide yet more evidence that uncertainty about the outcome of the EU referendum is slowing the economic recovery."