The prospects of mergers in the troubled construction sector appeared to rise over the weekend, after news emerged that Bellway, one of Britain’s biggest housebuilders, had made an approach to smaller rival Redrow to create a £1.2bn company.

Bellway would not comment on the initial report in the Mail on Sunday. Redrow did not deny that an approach had taken place, though a representative added: “I do not comment on speculation. But there are no talks.”