Economy may ‘overheat’ as unemployment falls

Efforts to boost house building could end up in a bloated construction industry and the economy ultimately overheating if the Government were to fail to rein in spending, the Economic and Social Research Institute has warned.

In its latest economic outlook, the think-tank believes the conditions that ended in the disastrous property crash a decade ago could start fermenting again as the economy sucks in more jobs to build houses.

Research professor Kieran McQuinn said the fast-growing construction industry could place the economy “on the horns of a dilemma”. That’s because new homes are needed to meet current huge shortages but the economy could not again risk devoting a lot of resources on construction.