The Observer this Sunday claimed 70,000 fewer homes would be built this year.

We face the biggest post-War slump in house building it said after interviewing Barratt chief Mark Clare.

Frankly that would be carnage and, if the figure proves anywhere near accurate, it would mean a cut of about £8 billion in workload for the construction industry.

Put another way that represents about 7% of total industry workload and equivalent to a cut in one year of more construction work than is going into the Olympics in London over seven.

It would throw construction into a sharp recession. We would probably see 100,000 jobs lost this year, at least, with more inevitably to follow.

The source of the story is one of Britain's biggest house builders, Mark Clare of Barratt. He isn't quoted directly using the figure, but it seems from the associated interview as if he provided the basis for the figure.

Looking at the impact on the broader economy, the loss of the sale of 70,000 homes (at an average sale price of 190,000 in 2007) would on its own mean a 1% drop in GDP.

Last year in Britain there were more than 180,000 new homes sold and a further 26,000 or so social homes built. That is a market value of best part of £40 billion.

Cut 70,000 homes for sale and that is a cut in revenue to the house building industry of about £13 billion. That doesn't take into account the fact that builders will be selling those they do build at knockdown prices.

And for those who think that the social sector will pick up the slack there is more bad news. First the social sector is small by comparison and secondly section 106 deals (planning gain payments in kind) account for about half the social homes built - what house builder is going to want to carry that cost when they are fighting for financial survival.

What is of concern is that the Government doesn't seem to appreciate fully just how frightening the situation is. If it does it appears to be in denial. We are potentially facing circumstances that will rip apart the means to deliver its much vaunted plans to see three million more homes by 2020.